Filing For Bankruptcy

When your bills start to pile up and there’s no end in sight, you might start to consider filing for bankruptcy. If you can’t financially keep your head above water and you can’t sleep at night because of it, you probably feel that there’s something you need to do to get out from under.  You are not alone in considering filing as a way to get a fresh start.  More and more people are considering filing for bankruptcy every year. These aren’t bad people, these are people who just find themselves in financial situations they don’t have control over.

Not long ago, it was very easy to file for bankruptcy and obtain a new, clean slate. That’s exactly why they changed some of the rules. Too many people were racking up debts, filing for Chapter 7 and then racking up debts and filing again. You had a blemish on your credit report for 7 years, but most lenders were willing to give you a chance to prove your credit worthiness, until you proved you didn’t have the means to keep paying.

Like everything else, a few people abused the system and the system tightened up.

Whether you choose Chapter7 or Chapter 13 you can eventually be discharged from bankruptcy. At that point you check your credit report to make sure all your creditors have been satisfied. There are 3 companies you will need to check for your current credit status. (Experian, Equifax, TransUnion).

Chapter 7 or Chapter 13

Once you decide that you are willing to do this and are a good candidate for bankruptcy, you need to choose between two different types of filings. Chapter 7 or Chapter 13.

The recent changes have made it hard to decide which is right for any particular situation.  Chapter 7 filings used to be the most popular form of filing. The court basically took all your assets and paid all your creditors. All debts were wiped clean and you ended up with nothing. Simple, drastic and it was accomplished fairly quickly.With Chapter 13 filings you will have to pay back a percentage of your debt (negotiated with your creditors). However, you might be able to keep certain assets with Chapter 13.  With the new laws that have been brought in, your income level plays a big part in what type of bankruptcy you must choose.

How Do They Choose Which Type?

You will have to produce and means test. This give the bankruptcy court the the ability to get a 10,000 foot view of your finances, what you make, what you have, what you are likely to earn, what are your prospects, etc.,

Another new wrinkle to consider when filing for bankruptcy is that you might be ordered to undergo credit counseling. This might be mandatory. There’s a lot of arguing about this step. Many people who are claiming bankruptcy are doing so because of situations out of their control, not because of financial mismanagement. However, at this point, it’s part of the law in many jurisdictions.

Take the time to call up a few bankruptcy lawyers or attorneys and ask for a free consultation. The more questions you can get asked (for free) the better position you’ll be in to make a smart decision as to file for bankruptcy, or not!

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