Filing for bankruptcy should not be taken lightly. While bankruptcy will wipe out your credit card debt and medical debt, and other loan debt, filing for bankruptcy will destroy uour credit for up to 10 years. You will lose all credit cards, property that you own to be sold, and it will be almost impossible to get large loans like a mortgage. And even then you will still be faced with obligations like child support, alimony or even any student debt you owe. However, there are still plenty of advantages that are worth considering such as a fresh start after 10 years, allow you to keep essential property and the ability to take out credit cards after a few years. If you have decided on bankruptcy or have been considering it, there are some things you should know going into it. With that said, read on to learn more.
Filing for Bankruptcy
- Getting Help
- Types
- How to File
Getting Help
If you aren’t sure whether you should file for bankruptcy or have questions, it may be advisable to speak to a financial advisor or get legal assistance. A legal professional can help assess your situation and figure out if bankruptcy is the best course of action. They will also be able to answer any questions you may have. They even be able to tell you which of your possessions will be exempt from being sold and what accounts cannot be closed. You can get a free review from certain advisors. Consumer Inquiry which can be found online will help you locate and connect with legal advisor that can assess your individual situation to help you decide, but in the end the choice is up to you.
Highlights:
- Find local financial advisors
- Some advisors offer free review
- Get legal or financial review
Types
Few people are aware that there are many different types of bankruptcy. Chapter 7 is easily the most common and the fastest way to file for bankruptcy. Also known as liquidation, the process can be completed in as little as three to six months and gives you a fresh start. Chapter 13 allows those who are earning money but struggling to pay debt the ability to keep their home and come up with a payment plan with the court. The individual filing repays through a trustee. Chapter 11 bankruptcy involves repaying debt through a court-approved reorganization plan, but it must be done in 120 days. Other bankruptcy types include chapter 12 designed to relieve debt for farmers and chapter 9 for municipal utilities and for school districts.
Highlights:
- Chapter 7 and 13 most common
- Chapter 11 for businesses
- Chapter 12 for farmers
How to File
If you are certain you want to file, there are some things you should know about the process. Once you’ve figured out which type of bankruptcy you qualify for, you can start the process. The rules are different for every state, but you’ll likely need to prove residency in the state you are filing. In California, bankruptcy forms can be sent by mail. However, you will need to go to the courthouse aat some point to meet with a bankruptcy trustee. To download the proper forms, you’ll want to visit the official website of your local bankruptcy courthouse. From there, you should also be able to review all the necessary requirements, including whether or not you need a lawyer. It should be noted that you must be prepared to pay any necessary fees. Filing for bankruptcy can cost you as low as $0 if you qualify for fee waivers or up to $2,500 in the state of California, for instance. Realize that filing for bankruptcy is no easy thing and the results you are looking for are not guaranteed.
Highlights:
- Download paperwork online
- Can cost up to $2,500 or more depending on state
- Fees can be waived
Conclusion
Filing for bankruptcy is not for the faint of heart. It’s a complicated process, but in just six months you could have a fresh start, provided you qualify and make an agreement with the court. If you aren’t sure whether it’s the right choice for you, speak to a legal advisor right away.