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Dealing with Debt: Filing for Bankruptcy

Many people facing insurmountable debt and no way to pay it off opt for bankruptcy. There are many issues to consider before taking this step, and if you are considering this relief you should research the subject thoroughly first.

Through this article, you are provided with some basic information in regard to bankruptcy and how bankruptcy may be a solution for you if you are dealing with bad credit and a financial house that is out of order.

Debating Bankruptcy

You should first determine if you will be better off after the bankruptcy. If not, you might consider getting the help of a financial advisor rather than file for bankruptcy. For instance, if you have recently become unemployed and can no longer pay your bills—and have creditors calling you constantly—you may want to consider negotiating with the institutions you owe rather than the taking the big step of filing for bankruptcy. Many creditors are very willing to negotiate and rework payment arrangements.


 


How Chapter 7 Bankruptcy Can Work for You

The Chapter 7 bankruptcy, you will have to prepare certain official forms and statements of what you own, as well as current income and living expenses. You must file these forms and documents with the United States Bankruptcy Court and pay a fee (which you may pay in installments if necessary). You will have to appear at a hearing set by the court and answer questions from any creditors about your financial situation and properties owned.

Limitations on Your Creditors

Remember that your creditors can only take so much of your property. Work tools, certain life insurance and bank accounts, some furniture, musical instruments, your car and your home may be out of their reach of you have claimed them as exemptions and they are within a range of values. However, if you have offered them as collateral you may not be able to keep them even if you have claimed them as exempt.

Debts That Cannot be Released

Also remember that there are certain kinds of debt from which you will not be released. Student loans and restitution are among those exemptions. Alimony and child support are also not included in your bankruptcy relief. It is your responsibility to find out what debts will and will not be discharged.

Do You Need Legal Assistance?

While it’s not necessary to hire a lawyer to file bankruptcy, the forms, documentation, and research can be formidable. Attorneys can offer legal advice that no one else can, and have quick access to information—they can also help you decide whether bankruptcy is the right answer for you, or if some other debt repayment option would serve you better.