5 Things You Need To Look At When Filing For Bankruptcy

Those who are struggling to handle rapidly mounting debt should take a moment to consider filing for bankruptcy. However, this is not a decision that should be made lightly and there are numerous considerations that need to be made. While there are five things that you need to look at, let’s start with the most crucial aspect:

Deciding Whether Bankruptcy Is The Right Choice For You

If you are someone who has been sued for unpaid debts or you are in danger of having your wages garnished, chapter 7 bankruptcy lawyers dallas is probably the right choice for you. But you must consider your long term financial prognosis before making the choice to file. Knowing your financial goals for the next few years will help you make the correct decision.

From there, you’ll need to take a closer look at the following factors:

  1. Possible Alternatives

Bankruptcy should not be looked upon as a magic wand that will make all of your debts vanish. When you are considering filing for bankruptcy, make sure that you have explored every possible alternative. If you are unaware of what your choices are, speak to a certified credit counselor. Before you bring in the big guns, you should have exhausted all other options.

  1. Know The Difference Between Chapter 7 and Chapter 13

Filing Chapter 7 bankruptcy allows for most (if not all) of your debts to be cleared in many cases. Chapter 7 bankruptcies are designed for those who do meet certain income requirements, whereas a Chapter 13 bankruptcy is geared towards applicants who are still earning a regular wage and want to establishment a payment plan. Chapter 13 bankruptcies are especially useful for homeowners who want to catch up on back payments.

  1. Research The Rules

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Before you decide to file for bankruptcy, it is important to research the rules and regulations that govern your particular agreement. You will need to complete a bankruptcy credit counseling course before you are approved and these courses can only be provided by counselors that have been selected by the court of law that is responsible for handling your case. Once the counselor has determined that there is no other route to be taken, you are able to continue the filing process.

  1. Your Personal Debts

There are a number of debts that cannot be discharged by filing Chapter 7 or 13 bankruptcy. Tax liens typically persist after bankruptcy has been filed, as well as student loans obligations and any debts that are related to back child support or alimony payments. Creditors can simply object to your requests in these instances and they are likely to win. Find out if your debts are eligible to be discharged before filing.

What You Need To Know About Bankruptcy

If one finds them in a pool of debt, and they awaken to the fact that they can’t afford to pay the first thing to consider is filling for bankruptcy. However, before filing bankruptcy, one needs sufficient knowledge concerning this option; how the process works and its consequences in the future. The following information can be of help before you declare bankruptcy;
  1. Legal fees will be incurred.

As though it is not enough to be broke, filling for bankruptcy is not free. There is filing fees to be paid and a lawyer’s money. If it’s impossible to raise money for a traditional lawyer one could consider going for legal service to obtain some legal advice.

  1. You must go to court

If one can’t stand the mention of a court and they find themselves in debts that are spiraling out of control, it’s unavoidable, and one must appear before a federal judge. In most cases the only hearing one will have to attend is one called the meeting of creditors. During this meeting, you answer questions from the trustee and creditors.

  1. It’s not a guarantee for a clean slate.

Neither Chapter 7 nor Chapter 13 clears all the debts. If one has a low income that allows them to file for Chapter 7, bankruptcy then a greater deal of the debt can be cleared. However, debts like Student loan, back child and alimony support, tax debt, court restitution orders can’t be discharged. Under chapter 13 one is required to pay back most creditors through a court-mandated payment plan. This is determined by what amount one has after meeting their recurrent daily expenditure.

  1. Chapter 11 cannot do it

bank3cChapter applies to businesses, not individuals. In Chapter 11, the businesses are not forced to close but are restructured. They can continue their operations, but their assets may be managed by a trustee.

 

  1. One can be forced into bankruptcy

If the debts are extremely high, creditors may petition the court to ask a judge that one be declared bankrupt. If this becomes the case, the debts are repaid using repayment plan.

  1. It’s possible to keep the home

Most states offer homestead exemptions. That means that regardless of the type of bankruptcy one files for they can still keep their home.

  1. Bankruptcy reflects on the credit report for ten years.

One may still get credit but be charged higher interest rates, receive lower credit card limits and have limited access to loans. It also affects one’s ability to buy a home or even rent one.

  1. Bankruptcy laws are federal

Bankruptcy cases are brought in federal court. Therefore, bankruptcy laws are the same across the United States.

  1. It takes time and effort to recover

After filing for bankruptcy it impossible to do it again for another seven years, therefore, has to be very cautious on how they undergo the recovery process. Rebuilding one’s credit is not easy.

Filing For Bankruptcy Is Not The End Of The World

Filing for bankruptcy is often considered to be a moment of ultimate failure, a setback that we cannot come back from. But this is merely the perception. In reality, filing for bankruptcy is not the end of the world and can help you to chart a course for a new financial beginning. There is no reason to feel badly about these proceedings.

The two most common forms of bankruptcy are Chapter 7 and Chapter 13. Let’s take a closer look at the benefits of each chapter and how they can be used to enhance your existence, as opposed to detracting from it.

Benefits of Chapter 7 Bankruptcy

In most instances, a person who is in need of financial relief will opt for Chapter 7 bankruptcy, as it leads to the discharge of most debts. The applicant must meet certain levels of income limitation and they can surrender certain assets in exchange for debt forgiveness. Property is lost in the short term, but the debtor is given a clean slate.

There are some debts that cannot be discharged, such as student loans and payments related to child support and alimony, but the debtor is able to hold onto a larger portion of future income. There are no limitations placed on the amount of debt that can be discharged and the debtor does not have to adhere to a court ordered repayment plan.

Debts are discharged quickly and the debtor is able to move on in an efficient fashion. Within a few years, their credit can be rehabilitated, as long as their remaining debts have been repaid and they continue to pay their monthly bills on time.

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Benefits of Chapter 13 Bankruptcy

This form of bankruptcy is designed to help those who continue to receive a normal income. Chapter 13 is the furthest thing from the end of the world, as it allows for the repayment of debts on a court ordered plan. A Chapter 13 bankruptcy can provide financial solvency within three to five years.

Chapter 13 bankruptcies keeps homes from being foreclosed upon and vehicles from being repossessed. If payments have been missed on homes or vehicles, Chapter 13 bankruptcy proceedings are typically more forgiving than Chapter 7.

Debts can also be restructured, which can offer relief in the form of lower monthly payments. A Chapter 13 bankruptcy is removed from your credit report within seven years and payments are based on the applicant’s monthly budget.

The term bankruptcy comes with several negative connotations. But filing for bankruptcy is not the same as waving a white flag of surrender. If you are considering filing bankruptcy and are unsure as to whether Chapter 7 or Chapter 13 is right for you, be sure to research the myriad benefits and advantages that each of them can provide.

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