Carrying too much debt is a problem a lot of people are dealing with now. Creditors and bill collectors hound them and there is no slow down in their bills. If you find yourself in this type of financial trouble, you may want to think about filing for bankruptcy. Keep reading to see if this is a viable solution for you.
Before undertaking the bankruptcy process, ensure you have made the correct decision. There are other options available, such as credit counseling for consumers. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, to help try and limit the damage to your credit.
Always be honest when filling out paperwork. It is vital that you disclose all information about your assets and income so there are no delays or penalties, such as a court barring you from filing again later in the future.
When choosing a bankruptcy lawyer, your best option is to find someone who is recommended by someone you know versus someone who you find online or in the phone book. There are way too many people ready to take advantage of financially-strapped individuals, so you must ascertain that your attorney can be trusted.
It is important to understand your rights when filing bankruptcy. Once bankruptcy has been filed, you may be able to regain possession of items such as electronic goods or cars that were taken away from you. If the property you own has been repossessed under 90 days before the bankruptcy filing, you may still be able to get it back. Talk to a lawyer for help with the petition filing process.
Before making your decision to file for bankruptcy, double-check to see if other, less drastic options could make sense. For example, you may want to consider a credit counseling plan if you have small debts. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Chapter 7
Learn the differences between Chapter 7 and Chapter 13 bankruptcies. If you file using Chapter 7 bankruptcy, you will get all your debts eliminated. Any ties you have concerning creditors will definitely be dissolved. Chapter 13 bankruptcy though will make you work out a payment plan that takes 60 months to work with until the debts go away. Both options have advantages and drawbacks, so do your research before deciding.
Protect your house. Filing for bankruptcy will not always result in losing your home. For instance, if your home value has dropped recently, or even if you happen to hold a second mortgage, you may not necessarily lose the home. Another option is the homestead exemption that has certain income and financial requirements, but may also allow you to keep your home.
Don’t file for bankruptcy if it is not completely necessary. You may find consolidating your debt may be simpler. Bankruptcy is a long process that can be stressful. Having a bankruptcy on your record will hinder your ability to get credit in the future. This is why it is crucial that you explore your other debt relief options first.
Unsecured Debt
Learn what you can about Chapter 13 bankruptcies. If you are receiving money on a regular basis and your unsecured debt is under $250,000, you may be able to file Chapter 13 bankruptcy. You can keep personal possessions, as well as real estate, while paying into a debt consolidation system. The length of the plan is generally up to five years, and when this is over, you will be free of unsecured debt. Remember that missing a payment to the plan will result in your case being dismissed.
Investigate other alternatives before resorting to bankruptcy. Find out if you can receive a reduced interest rate or altered repayment plan instead of bankruptcy filing. If a foreclosure is on your horizon, look into loan modification plans. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. Creditors want to recoup the most money possible from debtors, and they can often get more through debt repayment plans than bankruptcy procedures.
Take into consideration all the ramifications of a Chapter 7 bankruptcy. Filing for this can impact any co-debtors, such as friends or family. Once you file for Chapter 7 bankruptcy protection, you no longer have legal responsibility for debts that you and any co-signers originally agreed to. Although, your creditors may insist that the co-debtor pay off the entire debt.
Now you should be aware that there is plenty of available help when thinking about filing for bankruptcy. Don’t let the situation overwhelm you. Look at bankruptcy as a way to begin again.
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