There are a number of different reasons why you may decide to file for bankruptcy. It is important that you understand your options and make a decision that is best for you. Below are a few of the key factors to consider.
Chapter 7
Chapter 7 bankruptcy is an important option for those facing serious debt. It helps people to start over financially, while giving them a fresh start. If you’re considering filing for bankruptcy, contact an attorney for help.
Before you file, you’ll need to go through a pre-bankruptcy credit counseling session with a nonprofit credit counseling agency. This will determine whether filing for bankruptcy is your best option.
You’ll also need to meet certain income and asset requirements. In some states, you can use a state exemption system to shield some property from being sold to pay off your creditors.
The process of filing for bankruptcy usually takes four to six months. However, it can take longer if you have to provide additional documents to the bankruptcy trustee.
Chapter 13
If you’re looking for a way to get out of debt, consider filing for bankruptcy. Chapter 13 is a court-approved plan that helps you pay off your debt over three to five years. The benefits include a halt to foreclosure proceedings, an opportunity to catch up on past due payments, and a means to protect your property from lien stripping.
You must submit a specific repayment proposal to the court, which is reviewed by a trustee. You will be given several opportunities to make changes to your plan.
For example, you can extend your payment schedule on secured debts, such as a home mortgage, to decrease your monthly payment. Alternatively, you can reduce the principal balance on a secured loan.
There are also certain rules that apply if you’ve had a previous discharge in a Chapter 13 case. However, it’s best to check with an attorney.
Unsecured debt
If you are in debt, you have two options: paying it off or filing for bankruptcy. Filing for bankruptcy will help you eliminate unsecured debt and keep you from accumulating more. But you do not have to hire a lawyer if you don’t want to. You can use a free web tool such as Upsolve to get started.
Unsecured loans, such as credit cards, are the most common form of unsecured debt. They can be a great way to pay off debt when it’s due, but they are more risky than secured loans.
The interest rates on unsecured loans are often higher than on secured loans. The rate depends on the borrower’s credit rating. However, the borrower can improve their rating through timely debt payments.
Some unsecured debt, like medical bills, cannot be eliminated through bankruptcy. Instead, you may be able to negotiate a reduced balance or a settlement. A debt settlement specialist can speak to your creditors on your behalf.
Discharged bankruptcy and exempt property
When you file for bankruptcy, you have the right to exempt certain property. This will help you pay debts. Exemptions may vary from state to state. If you don’t understand your rights, you should consult an attorney.
A court-appointed trustee will gather non-exempt property and sell it. The proceeds will then be used to pay creditors.
In addition to paying creditors, the bankruptcy trustee will also monitor the repayment plan. You can keep most of your property. But you can lose other property if you do not obey a court order.
Most people file for bankruptcy under Chapter 7 because it allows them to get rid of most of their debts. While you can keep some of your non-exempt property, the creditors can still take it.
Effects on credit
Bankruptcy can have a huge impact on your credit, but it is not an instant fix. In fact, it may take years to get your credit back to a healthy level.
Bankruptcy affects your credit score in two ways. First, you will likely see a large drop in your score during the first year. It is a good idea to check your credit report frequently to make sure it is accurate.
Second, you can take steps to rebuild your credit. You can do this by creating a new budget and making big lifestyle changes. If you do this properly, you should be able to see a gradual improvement in your credit.
You can also try secured credit cards. These are similar to regular credit cards, but require an upfront security deposit. Some are even available for no up-front fee.
These are just tips in this article based on educated guesses. For accurate information, you can seek advice from professionals in the field. In Harrisburg, PA a bankruptcy lawyer can counsel you on the legalities of bankruptcy. Making sure you understand everything before you sign your name on that dotted line.
