Here is a new plan...

Bankruptcy can provide relief from overwhelming debt, but it also affects various aspects of your financial life, including savings, home, and retirement. Here's what you need to know:

• Liquidation: In a Chapter 7 bankruptcy, some of your savings or non-exempt assets may be used to pay creditors. However, certain exemptions protect specific amounts in your savings accounts depending on your state laws.
• Protection: In a Chapter 13 bankruptcy, you may keep your savings but must follow a court-ordered repayment plan, which can restrict access to those funds.
• Emergency Fund: If possible, build an emergency fund after bankruptcy to prepare for unexpected expenses.

• Mortgage Implications: 
  • In Chapter 7 bankruptcy, if you are behind on mortgage payments, you may risk foreclosure unless you reaffirm or negotiate the loan.
  • In Chapter 13 bankruptcy, you can include past-due mortgage payments in your repayment plan to avoid foreclosure.
• Exemptions: Homestead exemptions may protect some or all of the equity in your home, depending on state laws.
• Selling the Home: If the home has significant equity exceeding exemption limits, it could be sold to pay creditors in Chapter 7.
• Credit Impact: Bankruptcy will affect your credit score, potentially making it harder to refinance or purchase a home in the future.

• Protected Accounts: Most retirement accounts, such as 401(k)s, IRAs (up to a limit), and pensions, are generally protected in bankruptcy. These funds are considered essential for your future and are exempt from liquidation.
• Loan Implications: If you have a loan against your retirement account, you may still need to repay it, as these are not dischargeable debts.
• Focus on Contributions: After bankruptcy, prioritize rebuilding retirement contributions if they were paused or reduced.

• Credit Score: Bankruptcy remains on your credit report for 7-10 years (Chapter 7 for 10 years; Chapter 13 for 7 years), making it harder to get loans or credit during this time.
• Access to Credit: While bankruptcy affects your credit, you can begin rebuilding by using secured credit cards or small personal loans with on-time payments.
• Alimony, Child Support, and Taxes: These obligations are not discharged in bankruptcy and must still be paid.

• Cancelled Debt: In some cases, forgiven debt may be considered taxable income, though bankruptcy often excludes it from taxes.
• Tax Liens: Existing tax liens may remain on the property even after bankruptcy.

• Filing fees and attorney costs can be significant. Ensure these are factored into your financial planning.

Start fresh again! Even though you went through a lot of mental and financial stress, one thing you can do moving forward is follow a financial plan and invite God to help you follow it. He is our provider and already has a plan for you. Pray and ask him for direction in your financial life. He should be the focus in your life.