When considering bankruptcy filings, there are many factors to consider. Bankruptcy may not be right for you. It is possible that you don’t need to file bankruptcy if you are not judge-proof or you can make some simple financial changes. You may decide that bankruptcy is the only option to get debt relief and start over.
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The two most popular types of bankruptcy used in the United States are: Your attorney and you can choose which one is best for you.
Chapter 7 bankruptcy can be used to wipe out many of your outstanding debts within three to six months. You may also lose some personal property.
Chapter 13 bankruptcy will require a repayment plan that is based on your income. In the next three to five year, you will repay as much of your debts and the court will then discharge any remaining debts.
It takes dedication and time to go through bankruptcy. Each option will have an impact on your credit score, future interest rates, as well as your lifestyle, while you are working towards a clean slate.
Before making a decision, you should carefully consider your circumstances. A lawyer is the best person for reviewing your financial situation and advising you about your options.
Before you decide to file for bankruptcy or choose the right chapter for you, be sure to consider these points.
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Are I eligible for bankruptcy?
Each type of bankruptcy has its own requirements. If your income is too high, you might not be eligible to file Chapter 7 bankruptcy. The Chapter 7 means test is required. Alternately, if you have too few assets or too many debts, you might not be eligible for a Chapter 13 repayment plan.
Many bankruptcy attorneys offer free consultations, where they will walk you through all your options and help determine if you are eligible for bankruptcy.
Which of my Debts Will Not Be Forgiven
Some types of debts, such as student loans, child support, and tax, cannot be erased through bankruptcy proceedings. These debts will have to be paid back, regardless of whether you file Chapter 7 bankruptcy or Chapter 13. You should consider whether your debt falls into one of these categories.
An “automatic Stay” is a way to stop creditors harassing you about qualifying debts that you wish to discharge during bankruptcy proceedings.
What happens to my home if I file for bankruptcy?
It can be easier to pay your mortgage payments if you have some debt forgiven. If you file Chapter 7 bankruptcy, however, your home may be subject to foreclosure. As you seek debt relief, it is possible to foreclose or repossess your home. It is possible to keep your home in bankruptcy. It is worthwhile to speak to a lawyer to discuss this.
If your income is sufficient, you might be eligible to file Chapter 13 bankruptcy. This allows you to include mortgage payments in your repayment plan.
Can I keep my car or other property?
It will all depend on what happens to property other than bankruptcy assets during bankruptcy proceedings.
What you did with it?
You have the option to exempt property from certain laws
If you pledge your boat as collateral for a loan, it will make that loan secure. Even if you have filed for bankruptcy, the creditor might still be able take your property.
Exemption laws for Chapter 7 bankruptcy only protect certain types of property. State exemptions allow many people to keep their car, but it all depends on how much equity and debt you have.
Can my Credit Card Debts be wiped out?
Before you file for bankruptcy, make sure to determine if your credit card debt can be forgiven by the bankruptcy proceeding. You may not be eligible for bankruptcy if you lie on your credit card application or spend beyond your means.
Chapter 7 is the best option to get your credit card debt forgiven. Chapter 13 bankruptcy will force you to repay the majority of your debt.
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Are my Pension Plans and Paychecks Secure?
In bankruptcy proceedings, most pension plans and life insurance policies will be protected by state laws. Ask your state whether your pension plan (401k, IRA and/or life insurance policies) will be preserved before you file for bankruptcy.
Lenders may be able to garnish your wages in certain situations. Although this might not be possible in bankruptcy cases, a bankruptcy lawyer may help you to retain control over your paychecks.
Are my co-signers stuck with my debt?
To review co-signers, you should go through all your debt agreements.
Co-signers are not allowed to make payments on your debts. Chapter 13 bankruptcy generally protects any co-signers from your creditors, but Chapter 7 does not.
What happens to my personal life?
To have bankruptcy work, you must show the bankruptcy court all aspects of your financial life. Other people could also learn about your bankruptcy.
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Chapter 7 bankruptcy allows you to take some of your personal property and sell it to pay your debts. You will likely need to request permission to spend your personal money in Chapter 13 bankruptcy for the next three to five year.