Declining bankruptcy under Chapter 7 or 13 could be more pleasant and challenging. It is easy to become lost in the maze of requirements you must fulfill to qualify for this debt relief option. Here are some facts about bankruptcy that make the process of filing for bankruptcy simpler to grasp.
You Won't Lose Everything
You may believe that declaring bankruptcy requires you to give up your home, your vehicle, and any other assets you might own. You'll likely retain a significant portion of your belongings.
Most debtors who file for bankruptcy under Chapter 7 do not have any assets to surrender. This means they can keep their belongings. This is true for two different reasons. To begin, you can put aside certain fundamental assets, also known as exemptions, required for day-to-day living.
Because the types of assets that might be exempted differ from state to state, you must explore exemptions with your bankruptcy attorney. And what about the things you own that aren't protected by any exemptions? However, it's unlikely that the creditors will desire them.
According to Cathy Moran, a bankruptcy attorney in California, "the majority of the things that individuals have is either worthless or over-encumbered" due to a debt or a lien on the property. You don't need to be concerned about your creditors taking the flat-screen TV that is now sitting in your living room. However, if you have a BMW sitting in your garage, it may be sold at auction. You get to retain all of your property if you file for bankruptcy under Chapter 13, but the value of those assets is included in your repayment plan.
Not All Of Your Debts Will Be Relieved
You will get relief from most of your debts if you file for bankruptcy under Chapter 7 or Chapter 13, but there are a few exceptions. If you are found to be personally accountable for a debt, it is not possible to have that obligation discharged or erased via the bankruptcy process.
Moran explains, "There's a notion that there are some sorts of acts you shouldn't be able to avoid the repercussions of." This includes any recent back taxes, child or family support payments, and debts that directly result from your committing fraud.
Another kind of debt that is very unlikely to be discharged is student loans. In most cases, you will be able to have debts discharged, including those associated with personal loans, credit cards, and medical expenses, amongst other types of debt. Your bankruptcy lawyer will be able to assist you in determining which of your debts will be discharged.
It's Only Sometimes In Your Best Interest To Pay Off Your Debts.
Although declaring bankruptcy is one of the most significant choices you may make about your finances, this only sometimes indicates that doing so is a poor one. Declaring bankruptcy can be the most beneficial choice for you.
According to Matthew Olsen, a bankruptcy attorney, "bankruptcy is not a cure for any circumstance, and I believe that if you're thinking doing it, you should have an honest dialogue with an attorney." "There is a drawback in that it will have an impact on your credit score, but in many cases, this will be overshadowed by the relieve of worry and the fact that this issue will be fixed, which will allow you to move on with your finances."
If you have debts that amount to more than half of your yearly income and don't see any way to pay them off over the next five years, filing for bankruptcy may be your best option for being debt-free and enjoying your life.
Declaring Bankruptcy Is Not An Admission Of Personal Failure.
Since medical expenses were responsible for approximately 57% of personal bankruptcies in 2009, and the cost of medical deductibles has increased over the past decade at a rate that is seven times faster than the rate at which wages have increased, it is more likely that stagnant wages are to blame for many personal bankruptcies than poor financial management. Consider bankruptcy as a tool that may assist you in regaining command of your financial situation, regardless of why you choose this kind of debt relief.
Bankruptcy Will Not Ruin Your Financial Future
There is no getting around the fact that bankruptcy will stay on your credit record for seven to ten years. You may anticipate having restricted access to credit and paying much higher interest rates during this time. However, it is probable that within a short period after you file for bankruptcy, your credit score will begin to improve.
