Bankruptcy is a legal process, but it is also a profoundly personal one. Its effects rarely stay confined to just one individual. Your family’s well-being closely intertwines with yours, so they may also feel the impacts.
It can be tempting to protect your loved ones from financial stress. Still, starting a dialogue about bankruptcy can make the process smoother for everyone involved.
Making the process more manageable
Open communication with your family about bankruptcy is essential for several reasons:
- Bankruptcy can impact your family’s financial future: Since your credit report may display a bankruptcy filing for up to 10 years, your family needs to understand the long-term consequences of the process. These can affect your ability to acquire loans, use credit cards or even rent apartments.
- Bankruptcy may involve your family’s assets: You may keep specific exempt property, such as your home (up to a certain value) and personal items. However, it may be necessary to sell non-exempt assets to pay creditors. Your family should know what they might lose.
- Bankruptcy can be emotionally taxing: Sharing this financial burden with your family creates a support system, which can reduce the stress and anxiety involved when going through the bankruptcy process.
When you discuss bankruptcy with your family, it is important to explain that this legal remedy can offer a fresh start. Chapter 7 bankruptcy typically eliminates most unsecured debts within 4-6 months. In contrast, Chapter 13 bankruptcy requires you to follow a repayment plan that lasts 3-5 years.
Your loved ones will have concerns about your decision to file, so be ready to answer them as honestly as possible. Your family may be able to offer encouragement, help with budgeting, or even assist with childcare if you need to work extra hours. But this is only possible if you bring them into the bankruptcy process.
Talking to a legal professional is just as crucial
Aside from a family talk, do not forget to consult an attorney when filing for bankruptcy. A bankruptcy lawyer can help you fulfill the legal aspects of the process while you and your loved ones work towards rebuilding your financial stability together.