Debt is not fun and if you find yourself
immersed in a lot of it then you, like most people, have probably
given some though to throwing in the towel and declaring bankruptcy.
Bu t is this an option that you should actually follow
through with. Bankruptcy is not something that you should take
lightly, you need to realize just what bankruptcy will cost you.
Bankruptcy should always be your last resort.
Bankruptcy will affect your credit rating is a
huge way. In fact, it will destroy it completely and your credit
rating will stay in bad shape for at least 10 years. Not all of the
states are the same in their bankruptcy laws either. This could mean
the difference between keeping your house and car and losing them.
Before you file for bankruptcy, no matter how bad off you are, you
will need to learn all of the ins and out of bankruptcy
There are two forms of bankruptcy Chapter 7 and
Chapter 13. The most common by far is Chapter 7 bankruptcy. With
this form of bankruptcy you will be handing over or selling your
debts in order to get rid of your current debt. This is a good
solution for those who are determined to file but who do not have
much in the way of assets. If you have a lot to lose Chapter 13 may
be a better option for you.
Generally garnishments will have an end put to
them when you file for bankruptcy. There are exceptions to the rule
though. For instance in some places you will be able to keep your
home equity and other states do not. You need to learn about the
laws in your state to see just how you will be affected. Some states
will even make you sell your wedding rings in order to pay your
creditors more money while others will allow you to keep your home
and you car.
You cannot file for bankruptcy and then file
again as soon as you get back into trouble. You can only file once
every 6 years for Chapter 7 bankruptcy. Do not wait until you have
filed for bankruptcy to see which assets you will be allowed to keep
and which you will have to get rid of. You need to know that right
Once you have made your final decision and it is
to file for Chapter 7 bankruptcy then you will have to give a list
of your assets and your debts to a bankruptcy trustee. They will
tell you what has to go and what can stay. Your creditors will be
able to go over everything as well and they will then be able to
dispute anything they see as lies in your list.
While Chapter 7 can get rid of many of your
debts, you are going to find that there are some that are there to
stay. For instance you will not be able to erase alimony, child
support, student loans, tax liens, fees from criminal activities and
many student loans. These debts will still be with you after Chapter
7, so if these are the debts you are trying to escape you need to
realize that Chapter 7 bankruptcy is not going to do you any good at
When it comes to your credit and it's status you
will find that Chapter 13 is going to do you less damage in the long
run. The more debt that gets wiped in Chapter 7 the worse your
credit is going to look.
Chapter 13 bankruptcy is more like a form of
debt adjustment. With this form of bankruptcy you will be planning a
way to eliminate all of your debt the right way. When you are
planning your Chapter 13 strategy you are planning to pay all of
your creditors the amount they are actually owed and all within a 3
to 5 year period.
When you file for Chapter 13 you will not be
terminating any of your debts you will be re shaping the way that
you pay for them. You are coming to an agreement with all of your
creditors that will suit them well enough. At least this way they
will get the money that they are owed, if you had filed for Chapter
7 they might not have. All of your priority debts will be paid in
full, as will your secured debts but your other personal debts like
credit cards may have to take a bit of a hit.
Chapter 13 bankruptcy has some other positive
aspects that make it interesting. Some of your tax liabilities may
be taken car of as well. The older your tax debt is the higher your
chances of not having to pay for them.
A creditor does not have to accept your filing,
if they have any objections to it then they will have to let the
courts know. Oftentimes those who start out planning for Chapter 13
have no choice but to switch over to Chapter 7 because their
creditors will not accept Chapter 13. This is often because there
are limits to how much money you can owe if it is Chapter 13 that
you are thinking of.
If however your plan is agreed to by all parties
then the amount of disposable money or income that y9ou have will be
handed out to the creditors who having it coming to them according
to your repayment plan.
Before you file for bankruptcy no matter what
Chapter it is going to be you need to get in touch with a lawyer.
You do not want to be dealing with bankruptcy without one because it
is a long and difficult road. Do not choose just any lawyer either,
you need to choose a lawyer who specializes in bankruptcy