Going for Broke: Filing Bankruptcy

Regardless of your income, there is one thing we all can agree on: times are hard. Given this painstaking fact, more people are filing bankruptcy. This all stems from unemployment, rising cost of living, and skyrocketing medical costs.

For people in these predicaments, filing bankruptcy is often their only way for survival.

If you are facing bankruptcy, take time to learn what the bankruptcy laws are in your state as well as the different types of bankruptcies. This is a good time to consult a bankruptcy attorney for guidance on which bankruptcy you should file as well as learn your legal rights.

You’re not required to have legal representation; however, considering the recent changes bankruptcy has undergone, it is highly recommended that you seek the legal services of someone knowledgeable in this area.

For the purpose of this article, Chapter 7 and Chapter 13 bankruptcy filings will be reviewed. Both of these chapters are for individual filings.

Chapter 7

With Chapter 7 bankruptcy filing, you file a petition requesting that the bankruptcy court discharge all of the debts that you are responsible for. At this time, you list all your assets.

Fortunately with Chapter 7, there’s no debt limit. Thus, you can include as much debt as you want. And there’s no minimum debt requirement for filing. Most unpaid balances will be discharged under this bankruptcy filing. Any assets you acquire after declaring bankruptcy are protected, i.e., you can keep it.

It should be noted that Chapter 7 bankruptcy filing isn’t without its drawbacks. One of those disadvantages is that the court appoints a trustee to sell your assets.

Even worse is the situation regarding your home. If your home is included in Chapter 7 filing, it will only be protected from foreclosure temporarily. Sadly, you still could lose it to foreclosure. Just as bad is the fact that your credit rating will be damaged. This damage is irreversible because once you file Chapter 7 you can’t withdraw your petition.

Chapter 13

With Chapter 13, you show a plan to the bankruptcy court detailing how you will pay off your debts within 3-5 years. This plan is based on your income, your debt amount, assets, and property that you own.

Chapter 13 bankruptcy filing allows you to keep your assets and property. You have a longer time to repay your debt, which is good. This is because you don’t have to feel “rushed.” Chapter 13 bankruptcy filing is great protection against wage garnishment and foreclosure.

Filing bankruptcy under Chapter 13 has a few disadvantages. One of those disadvantages is the possibility of your future income being burden with debt. This is because when your bankruptcy ends, you still must pay whatever debt remains unpaid from your bankruptcy. Another disadvantage is the high costs of filing bankruptcy. These expenses are usually legal fees.

Conclusion

Being bankrupt these days is nothing to be ashamed of. It’s actually commonplace. Just make sure that at the end of your bankruptcy, you arise from this hardship in a better financial position.

To find a lawyer in your area, visit: Lawyers Guide