Bankruptcy, it is a hard decision to make. Where do you get good advice on bankruptcy, where can you get honest help with bankruptcy questions?
Besides dealing with the stress of finances, people often have the additional burden of emotional stress. This can cloud your ability to make the right decisions, for these reasons you need to understand how the process works.
Bankruptcy Facts
When it comes to personal bankruptcy there are two choices: Chapter 7 and Chapter 13.
Chapter 7 - This type of bankruptcy is called a "Total Discharge". Each state has a threshold requirement which uses income and household size. If you do qualify for chapter 7 you are allowed to keep a limited amount of assets, the rest will be surrendered to the court. It's not as bad as it sounds, you can keep cars (up to a certain value) household possessions ( TV, furniture, clothes), small amount of savings and retirement funds.
The point is you can't keep boats, diamond rings, expensive collectibles, things like that.
Once you declare bankruptcy all collections stop and you are now under the courts protection. From the day your papers are filed it takes a few months to get a court date. At this hearing your file is reviewed, you will be asked a few questions and if all is in order your case is forwarded to the judge. In a month or so your file goes before the judge. Since your case was reviewed earlier the judge will do a quick overview and then approve it. As of that day all your debt is discharged.
Chapter 13 - This type of bankruptcy is known as a Reorganization. If you don't qualify for chapter 7 and you are having trouble paying your bills, this type of bankruptcy is for you. You might have enough money to pay your house, but with all the other debt you are in financial trouble, chapter 13 can help.
Basically, you can keep your house and the court decides how much you will pay beyond your mortgage payment. You will pay the court that set amount each month and the court disburses it to your lenders. The plan generally goes for 5 years. At the end of 5 years all the outstanding debt is discharged.
Now That You Know the Basics, is Bankruptcy Right For You?
The first thing is you can get advice on bankruptcy for free. A bankruptcy lawyer offers free consultations so you can get help with bankruptcy at no cost.
The second thing is, how deep in debt are you? If you are falling behind in payments you are subject to late fees and penalties. This could lead to collections and judgments. The only way to get legal protection from the courts at this stage is through declaring bankruptcy.
Since each state has different guidelines for the types of bankruptcy you can file, it is advisable to at least take advantage of the free consultations. Of course you know a bankruptcy will be on your credit report for 10 years, but remember - bankruptcy is a financial tool, a fresh start could be just right for you.
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