8 Bankruptcy Facts You Should Know

by Frank

1.Two Types of Bankruptcy

Two types of bankruptcy exist for individuals, and those are Chapter 7 bankruptcy and Chapter 13 bankruptcy. The biggest difference between those two types of bankruptcy is the amount of effort that you have to put in to pay your debt back.

A Chapter 7 bankruptcy can provide you with a clean slate and allow you to keep your assets because the judge will forgive your debts. Consumers always try to qualify for this one because it requires them to pay the least amount of money. Less bankruptcy costs to pay out means less stress for the consumer.

2.Chapter 13

A Chapter 13 bankruptcy is one for which you have to develop a repayment plan, and your creditors must approve it to be valid. It becomes a binding legal document once the judge approves it, and you must stick to making the payments in a timely fashion. Your income will determine whether you are eligible for the Chapter 13 arrangement or the Chapter 7. Everyone would love to be eligible for Chapter 7, but unfortunately, you may not be. Your income must be low enough to qualify you, or you must be totally unable to repay your debts. It may be wise for you to get an attorney to assist you so that you can know for sure if you will qualify for the appropriate bankruptcy type and assist you if you’re not sure what the offer to pay the creditors. If you need legal assistance you can also find additional legal aid here and you can search for a lawyer here.

3.Your Location

Everything with this type of procedure varies according to your location. Not only can the cost of the bankruptcy filing vary depending on your state of residence, but also the attorney’s fees vary according to location. Your qualification status is something else that can change immensely. It goes by the state median, so if you live in a state that has a low median, you may get stuck paying some of your debt back. You would be wise to conduct a little bit of research about your location before you decide whether this is the correct option for you.

4.How to Keep Your Assets

It is quite possible for you to be able to keep all of your assets like your home, car and other items even though you file for bankruptcy. A good way to do that is to talk to a bankruptcy attorney because ultimately, this person knows all of the exemptions that may allow you to keep the items that are dear to you like your home. He will review all of your information, take some additional information and then advise you as to whether it will be wise for you to go for Chapter 7 or if you should simply apply for a Chapter 13. You should listen to the attorney’s suggestions, especially if he has been doing his job for many years.

5.Credit Damage

Another thing that you want to consider before you go ahead and file for bankruptcy is the credit damage that it may cause you. Because you were not responsible with your debt, and you are getting such a huge break from your creditors, you will lose credit points. The bankruptcy will also show up on your credit report so that people can see it if they are looking for you by pulling your report. You may not be able to get the credit that you want for as long as 10 years. Thus, you will have to ask yourself if you’re prepared to go for 10 years without the ability to obtain credit. if the answer is no, then you may not want to conduct and bankruptcy filings. If are willing to wait for some time and then do other things to boost your score, then you may just have a good plan for recovery.

6.Bankruptcy Costs

You will have to strongly consider the cost of all of this before you decide. The filing fee where you live may only be a little more than $300, but the lawyer’s fees could be astronomical. Some attorneys charge $2,000 or more. Now, you may be able to work out an installment plan with the courts for the filing fee, and you may even get a nice lawyer who is willing to allow you to pay in that manner, but there is no guarantee of such things. Unfortunately, it does look like you need some money so that you can declare that you don’t have any money.

7.Public Records

Public records are another thing that you will have to consider before you go ahead and move forward with the process of filing for bankruptcy. The reason is that all kinds of people will be able to see your personal information and see that you had bankruptcy issues. Bankruptcy is a matter of public interest and record, so it will be out there for the world to see. If you don’t mind it being out there for the world to see, you can go ahead and proceed. Just as long as you know that potential landlords and employers can see this information, and it may have an impact on any decisions that they have to make.

8.Clean Slate

Finally, the last thing you want to consider is how important is it is for you to have clean slate. If it’s truly important to you, then it’s something that you will be willing to wait for. Eventually, you will be able to apply for credit, receive credit and so on. It may just be worth it to you to go through the growing pains and then come out of your situation stronger than ever. Take the time to schedule a consultation and get the opinion of an experienced attorney on the matter. You may be able to find one who is willing to give you a consultation. In that case, you have nothing to lose for asking about it.