The Basics in Filing for Bankruptcy
The recent economic recession has left people unemployed, credit scores abysmal, and money inadequate for many. Some people have earned massive debt as a result of all the factors listed above. What happens is that they cannot pay their rising debts due to insufficient income. Usually, the only option for these people to get out of their debts is to apply for bankruptcy.
Bankruptcy is an individual or a business’ status when it does not have the capability to repay debts. Most cases are “voluntary” bankruptcies, which individuals and businesses file to wipe off debt owed to creditors. When successful, a bankruptcy allows one to start off with a clean slate, although the catch is that it will appear for long on a person’s credit record.
The two most common bankruptcy types fall under Chapter 13 and Chapter 7 bankruptcy. Chapter 13 allows debts to be paid over a three-to-five-year period, allowing one to pay all obligations, and keep his possessions without foreclosure. Chapter 7, meanwhile, does not require payments, since all obligations will be wiped out, allowing one to start fresh. However, it does not stop foreclosure, and creditors can still take things like houses and cars away.
When inquiring how to file bankruptcy, one should consider other options first before going through with the application. A state of bankruptcy remains in one’s credit record for 10 years. One should research on different lawyers since they are the ones who will help in the proceedings and assist with the means test.
If one is filing for bankruptcy, it is important to settle payment terms with a lawyer. If filing for Chapter 13 bankruptcy, try to find out if it is possible to settle the attorney’s fee as part of the three-to-five-year debt payment plan. For Chapter 7 bankruptcy, the lawyer cannot become one’s creditor, so the attorney’s fee should either be paid in full before filing the case, or the attorney must waive any unpaid fess from the debtor after the bankruptcy has been granted.
Filing for bankruptcy should not be a tedious process. One should only remember that Chapter 13 bankruptcy is for people who still have regular income, while Chapter 7 is for those who have no income at all. Unless someone is very curious, no one will ever find out that one has become bankrupt. Remember to be responsible, and enjoy the fresh start.
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