Bankruptcy Advice: Is Bankruptcy Right For You?
You're overwhelmed with debt and fear the worst. You've never missed a payment or been late before but now you're finances are out of control and it seems more possible now than ever that you may be at the end of your rope. What to do? Who to turn to? How do you dig yourself out?
Is bankruptcy an option for you or not? Not everyone will qualify for bankruptcy but when done correctly, a bankruptcy petition can be your savior. Here are some of the things you must consider when thoughts of bankruptcy enter your mind.
Learn What Bankruptcy is?
It's important that you inform yourself as much as possible about what bankruptcy is, how it works, and what types of bankruptcies exist in the code. This is particularly true if you will be filing alone.
Learn about chapter 7 bankruptcy and what is required to qualify under this chapter and discharge your unsecured debts at no further obligation. Also become very familiar with the rules and qualifications of chapter 13 bankruptcy to prepare yourself accordingly if you can't qualify for chapter 7.
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Are There Alternatives to Bankruptcy?
It's possible that you are overwhelming yourself unnecessarily and your situation may not require considering bankruptcy. A good thorough assessment of your finances is absolutely needed to determine with accuracy where you.
Should your situation need professional help outside of the field of bankruptcy, there alternatives you can consider and you can see many of the most feasible ones here. See Bankruptcy Alternatives.
Learn What Types of Debts Can Be Discharged
Unsecured debts can be discharged under chapter 7, however not every debt is an unsecured debt. For example your mortgage is a debt tied to a collateral, your home. Your car loan is tied to your vehicle. These types of debts can not be discharged, they must be reasserted or surrendered during bankruptcy.
Other debts that can not be discharged are tax liens, student loans, child support, alimony and other judgments against you. Unsecured debts primarily refers to credit card debt, personal loans, medical bills and in many cases there are debts that may not fit the descriptions here so it's up to your attorney to help you decided what else can be considered unsecured debts.Be Prepared to Deal with Losing your Home
As mentioned above, your home mortgage is not unsecured therefore can not be discharged. However mortgage debt is the kind of debt that in most cases qualifies for reorganization. So by filing chapter 13 you may be able to get yourself better repayment options. However if you have substantial equity in your home, it could be considered an asset worth liquidating under chapter 7. Exemptions laws will apply, but this will be decided by someone other than you, so be prepared to surrender your home if you are not able to continue paying for it.
What Will Happen to your Credit Card Accounts?
Credit card companies get a little nervous when they hear the word bankruptcy from one of their clients. Depending on what chapter you file they will either get nothing from you or they will have to accept a new repayment plan. In either case most of your credit cards will not allow you continue charging with your cards. If filing chapter 7, they will automatically close the account and report as "filed under bankruptcy". Even if you have credit cards with 0 balance, they will be notified as well and those accounts will be closed as well.
If filing chapter 13, your credit card companies may work with you after accepting your repayment plan, and keep your accounts active though you may not be able to charge anything until you have paid the arrears. Most likely though your accounts will be frozen until paid off and then closed
What Will Happen to Your IRA, 401k and other Pensions?
In most cases, these types of accounts (assets) are exempt. This can change dramatically from state to state. It's important that you find out for sure by consulting a bankruptcy attorney on the matter to determine with accuracy before you file.
How Will Bankruptcy Affect You, and Can it be Kept Private?
Bankruptcy is tough to deal with no matter what chapter you file, the relief that you get from not dealing with creditors anymore may not last long due to the loss of credibility you now have. Most creditors will not want to take chances on lending you money unless they impose terms that will protect them, meaning you'll pay more in interest.
Your lack of credibility is one thing, your new bankruptcy record will be quite another, as this is now considered public information. Meaning anyone needing to find out if you filed bankruptcy can and very easily. No need to talk about this with everyone you know, but just know that it is not something you can keep secret from everyone.
If you want clear and straight forward bankruptcy advice and answers on what it takes to file bankruptcy for you, take 30 seconds to fill out the secure online form and get a free bankruptcy evaluation with an attorney in your area.
