Dealing with debt is not an easy process. Seeking legal help is necessary when working on debt management. Filing for bankruptcy enables a debtor facing financial problems to wipe out debts without having to repay everyone in his or her creditor list. A declaration of bankruptcy helps individuals and businesses seeking debt relief. Consulting a trusted bankruptcy lawyer will be beneficial for you to understand the complexities of bankruptcy law. He or she can discuss how to file a bankruptcy petition and avoid mistakes as you go through the tedious bankruptcy process. Bankruptcy lawyers will also help you have a fresh start and rebuild your financial future through a successful bankruptcy filing.
There are certain types of bankruptcy that you may choose from depending on the types of debt you have. Filing Chapter 7 (liquidation bankruptcy) and Chapter 13 (reorganization bankruptcy) are the most common.
When filing Chapter 7, your bankruptcy trustee shall liquidate your nonexempt assets. A trustee in bankruptcy cases shall be the one to manage the sales of your personal property and distribute the funds to your creditors.
Meanwhile, if you decide to file for bankruptcy under Chapter 13, you are to negotiate for a repayment plan. Under this filing chapter, you may stop foreclosure and repossession as long as you can make the required monthly payments. Your bankruptcy petition trustee will also be the one to secure the funds to be given to your creditors.
Pros of Filing a Petition in Bankruptcy
-
Automatic Stay
Bankruptcy filings begin when the relevant paperwork and supporting documents are filed to the bankruptcy court. Once it has been approved, an automatic stay shall take effect immediately. This shall stop wage garnishment, foreclosure, harassment, repossession, utility disconnection, and even possible lawsuit. An automatic stay prohibits any collection activities from lenders and debt collectors.
-
Bankruptcy Discharge
The main goal of filing bankruptcy is to have your debts discharged. In Bankruptcy Chapter 13, after you pay off your debts and successfully finish your payment plan, you are no longer obliged to pay back your remaining debts, as this will be discharged.
-
Securing Personal Property
Filing bankruptcy under Chapter 13 enables you to retain your house, vehicle, and other properties. While Chapter 7 will require you to liquidate your assets, there are exemptions. These will depend on the state law in place when you filed for bankruptcy. Bankruptcy attorneys can advise you on how to work around these exemptions.
Cons of a Bankruptcy Proceeding
-
Credit Score
One of the issues that you have to deal with when you file a bankruptcy petition is a drop in your credit score. A Bankruptcy Chapter 7, for instance, will stay on your credit report for ten years. However, this drop in the credit score is worth the fresh start you will get.
-
Child Support, Alimony, and Student Loan Debt
There are some obligations that bankruptcies cannot wipe out. These include certain tax debt, child support, alimony, and student loans. Your bankruptcy attorney can advise you on what would be the best course of action if most of your debts cannot be discharged even after filing bankruptcy.
Consult with a credible and experienced bankruptcy attorney to help you as you prepare bankruptcy forms and other paperwork for your bankruptcy case. Call us at the Northwest Debt Relief Law Firm for legal help and assistance.
