Filing for bankruptcy can be a scary and confusing process. You probably fear losing everything you own, and worry about your financial future. However, bankruptcy laws are in place to help people who are struggling financially. Filing a Chapter 7 bankruptcy could even help you get back on your feet financially a lot faster than you could any other way. These are some things to think about when you're considering bankruptcy.
Talk To An Attorney
The first thing to do is schedule an appointment with a Chapter 7 bankruptcy attorney, such as Kreisler Law PC Chicago. It's a good idea to do this even if you're not sure what to do about your financial problems. You need to find out if you are eligible for bankruptcy. If you've filed in the recent past, you may not be able to file again. If your income is above a certain level, you may only be able to file a Chapter 13 bankruptcy, which restructures rather than eliminates your debt. By knowing your options, you're in a better position to know if you want to proceed with bankruptcy.
Spare Some Assets
Bankruptcy laws vary among states. That's why you need to talk to an attorney rather than rely on second hand advice you get from well-meaning friends. It's possible your state allows you to save some of your assets. You'll probably get to hold onto your home and your primary vehicle. However, if you are behind in your payments, Chapter 7 won't help you get caught up. You'll still have the late payments for your car loan and mortgage hanging over your head as you go through bankruptcy. This might cause you to lose them later to repossession or foreclosure. Many of your other assets might be sold to pay off your other creditors.
Debts You Can't Include
There are some things that cannot be included when you file for bankruptcy, such as late child support payments, back taxes, and student loans. If you are behind on these debts, you may want to consider a Chapter 13 bankruptcy instead, because it allows you to reorganize your debts for things like late mortgage payments and student loans, so your back debt is caught up to date. The debt isn't forgiven, you make payments on it to the court until it's paid off, but it's a way to get out from under a load of late payments you can't write off in bankruptcy.
Low Income Solution
In order to file for Chapter 13, you need enough monthly income to pay your current debts, maintain your lifestyle, and pay off the back debts too. That may not be an option for you. Chapter 7 is probably the best solution if your income has dropped because of a job change or loss. With a Chapter 7 bankruptcy, many of your debts will be forgiven, so you can start over with a clean slate.
Better Money Management
As a condition of your bankruptcy discharge, you may be required to undergo financial counseling, so you can manage your money better. These classes may help you avoid getting in a financial bind again in the future. Chapter 7 bankruptcy is a fairly quick process that completes in several months. Since creditors know you won't be eligible to file for bankruptcy again for several years, some are willing to extend credit as soon as your bankruptcy is discharged. The last thing you want to do is become a slave to credit again, so learning how to spend and save money before you take on new credit is probably a good idea.
If you're in financial distress, talking to an attorney should give you peace of mind. Not understanding your options can cause you to be fearful or ashamed. Taking action to solve your problems not only helps you feel better, it's the first step towards financial security. Chapter 7 may be the answer for you because it stops creditor harassment right away, it's over quickly, and it releases you from the stress of debts you have no way to pay.