At some point in time, you may have considered filing for bankruptcy. For most, this is a last chance type of thing that has some stigma attached. However, taking this step is not as daunting or tragic as it may seem. There are a few things you should expect in relation to your bankruptcy filing.
One important step is deciding whether or not to file. A bankruptcy works well for those people who have substantial amounts of unsecured debt, such as credit card or medical bills. Certain types of filing will allow you to keep some of your personal property, such as your house or car.
However, it does not relieve you of certain obligations and debts including child support, past due spousal support, and many student loans. Since this will show up on your credit report, you must determine whether or not the reduction in your credit score will be offset by the benefits of filing. If you are having your wages garnished, getting a large amount of harassing calls from creditors, or getting sued, filing may bring considerable benefits, including the reduction of stress.
The next step is to determine the type you will file. As always, you should check with a lawyer to be sure you are making the best decision possible. There are certain circumstances where one type would be more beneficial than the other.
There are two classes of filings, a Chapter 13 and a Chapter 7. A Chapter 7 will discharge your unsecured debt after the bankruptcy. A Chapter 13 sets up a payment plan for you that allows you to make reduced payments on your unsecured debt. Chapter 7 is considered a liquidation, while Chapter 13 is more of a reorganization. However, the Chapter 13 option allows you to keep more personal property than a Chapter 7. A Chapter 13 would be more beneficial to someone who has a lot of equity in their home and does not want to sell, for example.
A Chapter 7 will often only allow certain types of property to be retained. This can vary according to the laws of the state in which you reside. However, often you can only keep personal belongings such as tools used in your job or furnishings and clothes. Homes and cars are only exempt if the amount of equity is below the limits. Any other assets are used to satisfy the demands of your creditors.
Under a Chapter 13, you can usually keep all of your property since you make payments from your income for the next few years. This works well for homeowners will large amounts of equity in their homes or that have late model cars that are paid for. In certain cases, you can choose to pay for a car through the payment plan, enabling you to paid one lump sum each month for the discharged debts plus your car payment.
A bankruptcy filing also immediate puts into effect an automatic stay, which stops lawsuits, foreclosures, garnishments, and often even utility shut-offs. Some of these may be reinstated, but this does give you some breathing room. Many times bankruptcy is a life saver and it reduces the stress of collection calls and late payments, and allows you to make a fresh start in life.
One important step is deciding whether or not to file. A bankruptcy works well for those people who have substantial amounts of unsecured debt, such as credit card or medical bills. Certain types of filing will allow you to keep some of your personal property, such as your house or car.
However, it does not relieve you of certain obligations and debts including child support, past due spousal support, and many student loans. Since this will show up on your credit report, you must determine whether or not the reduction in your credit score will be offset by the benefits of filing. If you are having your wages garnished, getting a large amount of harassing calls from creditors, or getting sued, filing may bring considerable benefits, including the reduction of stress.
The next step is to determine the type you will file. As always, you should check with a lawyer to be sure you are making the best decision possible. There are certain circumstances where one type would be more beneficial than the other.
There are two classes of filings, a Chapter 13 and a Chapter 7. A Chapter 7 will discharge your unsecured debt after the bankruptcy. A Chapter 13 sets up a payment plan for you that allows you to make reduced payments on your unsecured debt. Chapter 7 is considered a liquidation, while Chapter 13 is more of a reorganization. However, the Chapter 13 option allows you to keep more personal property than a Chapter 7. A Chapter 13 would be more beneficial to someone who has a lot of equity in their home and does not want to sell, for example.
A Chapter 7 will often only allow certain types of property to be retained. This can vary according to the laws of the state in which you reside. However, often you can only keep personal belongings such as tools used in your job or furnishings and clothes. Homes and cars are only exempt if the amount of equity is below the limits. Any other assets are used to satisfy the demands of your creditors.
Under a Chapter 13, you can usually keep all of your property since you make payments from your income for the next few years. This works well for homeowners will large amounts of equity in their homes or that have late model cars that are paid for. In certain cases, you can choose to pay for a car through the payment plan, enabling you to paid one lump sum each month for the discharged debts plus your car payment.
A bankruptcy filing also immediate puts into effect an automatic stay, which stops lawsuits, foreclosures, garnishments, and often even utility shut-offs. Some of these may be reinstated, but this does give you some breathing room. Many times bankruptcy is a life saver and it reduces the stress of collection calls and late payments, and allows you to make a fresh start in life.
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