Guide To Filing For Personal Bankruptcy

By Debra Hall

Anyone with a lot of bad debt can file for bankruptcy in a bid to get debt forgiveness. There are many types of bankruptcies that different types of debtors can use to get rid of their debts. It is important to note, however, that bankruptcies have pros and cons that debtors should know about. When thinking about personal bankruptcy, you may want to consult a competent lawyer to advise and guide you through the process.

There are several legal consequences of becoming bankrupt that you need to know about before you decide to go through with the process. Therefore, you should consult a competent attorney to ensure you know what you are getting yourself into before you sign the necessary paperwork. Fortunately, there are many competent lawyers you can talk to.

Chapter 13 is what is usually referred to as personal insolvency. However, it can be looked at as personal debt restructuring. This is where the debtor comes up with a repayment plan and honors it for several years before they get debt forgiveness. Chapter 7 can also be looked at as a personal insolvency option when it is used by an individual debtor instead of a corporate debtor.

Experience is a key factor to consider when searching for a suitable attorney. That is why you have to compare the number of years an attorney has been in business as well as the number of bankruptcies they have handled over the years. The ideal attorney must have also been practicing law in your city for many years.

There are several adverse effects of becoming bankrupt. For starters, your credit rating will be negatively affected, which means that getting affordable credit will become extremely difficult. Secondly, getting a job or a cheap loan will be next to impossible as lenders and employers usually avoid applicants with a tainted credit history. Be sure to keep this in mind when filing the necessary paperwork to have the court declare you bankrupt.

After declaring that you are bankrupt under chapter 13, you need to know that if you fail to meet the terms and conditions that you have proposed to creditors and the court, your assets will be liquidated by the trustee under chapter 7 proceedings. This is because the default means that you do not have meaningful income to honor all your debt obligations.

The best thing about chapter 13 is that you will not lose your belongings. You can even keep your home after defaulting on your mortgage payments. Basically, this option allows you to retain all your assets as you service your debts with regular monthly installments over a period of several years.

Anyone with a lot of bad debts that attract late payment penalties and fines should consider consolidating their debts or refinancing. This will help to ensure their debts are settled in a timely manner. If this fails, bankruptcy may be the only option. Once your petition has been filed in court, all interest, penalties and fines will be frozen. Creditors will also be directed never to contact you directly. This means that you will get peace of mind when you become bankrupt.

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