A bankruptcy filing is a legal process that enables debtors to overcome financial problems and deal with their burdening amount of loans and debt. A bankruptcy petition may also help an individual have a fresh start at life. There are, however, certain things you need to consider before declaring bankruptcy:
Bankruptcy forms are suited for certain types of debt
A specific declaration of bankruptcy that worked well for one could or could not work for another. Each bankruptcy case is unique, and you must think thoroughly to know which one is most appropriate.
There are different types of bankruptcy for different people and circumstances. The most common phrases you will encounter are personal bankruptcy, consumer bankruptcy, or business bankruptcy. The types of debt you owe, what you currently have, and how you intend to wipe out or pay all your debts will factor into the bankruptcy chapter suited for you.
Bankruptcy forms may look simple and easy to fill out, but they are not. You should hire and consult with a reliable bankruptcy lawyer. To avoid discrepancies and other issues, it is important to understand bankruptcy filings. You must be very honest when providing information about your finances, as these will be looked into during the actual bankruptcy proceedings. Be detailed and truthful when disclosing your assets, total debt, and list of creditors. If you violate any federal bankruptcy law, you may be sued and charged with a federal crime.
Filing bankruptcy is not cheap
Filing for bankruptcy can be expensive. From filing fees to court fees, it would cost you a lot of money. Filers may petition for a fee waiver. The bankruptcy court will likely look into your monthly income and decide on the approval of the waiver.
Know the different types of bankruptcy
Bankruptcy Chapter 7 is also known as liquidation bankruptcy. Individuals who file bankruptcy under this chapter will have their assets liquidated, the sales shall be distributed to his or her creditors. To ensure that there is no interaction between the debtor and any creditor, a bankruptcy trustee will be assigned to take care of selling and making payments to the creditors. Bankruptcy cases under Chapter 7 usually take about four months.
Meanwhile, if you want to secure most of your personal property while dealing with debt, reorganization bankruptcy is for you. Filing bankruptcy under Chapter 13 will allow an individual to keep his or her assets. In this type of bankruptcy proceeding, you will pay back lenders with whom you have a secured debt (such as car loans or mortgage payment) through a payment plan. Under the relevant bankruptcy law, such a plan will run for a set period, usually three to five years. While you must pay for the value of non-exempt properties to unsecured creditors, its main advantage is that you will be able to avoid repossession and foreclosure.
After filing a bankruptcy petition, an automatic stay shall take effect. In either chapter, this protects you from debt collectors. This can stop foreclosure, eviction, wage garnishment, and utility disconnections. However, there are certain issues that an automatic stay cannot stop, such as those involving tax proceedings, criminal proceedings, or pension loans. Bankruptcy lawyers educate you on how this would work for your particular case before you file for bankruptcy.
Bankruptcy laws can be detailed and confusing. If you are struggling with debt and loans, seek help from trusted bankruptcy attorneys. Remember, you may face fines and penalties if any bankruptcy rules will be violated. Such additional expenses would be the last thing you would want.
A bankruptcy proceeding begins with filing a petition in bankruptcy court. The goal of going through the tedious bankruptcy process is for you to wipe out or repay all your debts. It is highly recommended that you contact an experienced bankruptcy attorney as soon as early as you can. Ask about the bankruptcy procedure, including anything unclear to you with an experienced bankruptcy attorney.