Bankruptcy Law: 4 Things You Should Know About It
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By PAGE Editor
Most people know the basics of bankruptcy law, but many don’t understand what it can and cannot do for them. They think that just because they filed for bankruptcy, their financial troubles are over. However, that is not always the case. Filing for bankruptcy does not automatically erase all debt. In fact, it only protects certain types of assets against seizure by creditors during a personal or business bankruptcy proceeding.
This article will discuss four things you should know about this complicated topic to ensure you fully grasp its magnitude before taking any final action on your own behalf or with an attorney’s help.
1) Types Of Bankruptcy Proceedings
There are two most common types of personal bankruptcy proceedings: Chapter 7 and Chapter 13. These correspond to the type and priority of your debts. Some individuals choose to file under both types, but it is not necessary or possible in all cases. For instance, an individual with a home mortgage may not be able to qualify for Chapter 13 unless he or she also has a high amount of non-priority debts. As seen at www.fight13.com, you can find attorneys specialized in both types of bankruptcy proceedings who will evaluate your debt situation and advise you of your options and alternatives. It's important to know that filing for personal bankruptcy is a serious step and should not be taken lightly.
2) How To File For Bankruptcy?
If you decided to file for bankruptcy, contacting a lawyer would be the first step. Then, you must attend a counseling session with a credit counseling institution that has been approved by the Department of Justice's U.S. Trustee Program before filing. The counselor should assess your specific financial circumstances, explain bankruptcy choices, and assist you in developing a budget plan.
As mentioned before, an attorney will help you file for either Chapter 7 or 13, depending on your unique situation, and provide guidance during the entire process. It is crucial to have legal representation when filing for bankruptcy because failure to comply with certain rules may not only result in a dismissal of your petition but also leave you open to fines and/or jail time.
3) Is Bankruptcy the Right Choice for You?
If you are wondering when to file for bankruptcy, the first thing you need to do is determine if this approach fits your unique situation. Not all debts can be discharged, which means that some of them will still have to be paid back after bankruptcy proceedings have been concluded. For example, child support obligations, student loans, and court-ordered damages for personal injury cases are not dischargeable in most situations.
Also, in some cases, you may not even qualify for bankruptcy protection, as it does not offer a fix for every financial problem. If you want to know if bankruptcy is the right choice for you, contact an attorney and find out if your debts fit the requirements for either Chapter 7 or 13 proceedings.
Also, it's important to note that if you earn or expect to earn an income after filing bankruptcy (for example, by getting a job), it’s important to anticipate whether the additional funds will be enough to cover your monthly expenses.
4) Alternatives To Filing For Bankruptcy
If your total debts outweigh the value of your assets, you may be able to avoid bankruptcy. A non-profit credit counseling agency can offer advice on dealing with creditors and help you develop a plan to repay your debts. This may involve borrowing money from friends or relatives, negotiating with your creditors, speaking with debt collectors, using credit cards less often, delaying major purchases until the economy turns around, or cutting back on unnecessary expenses.
Keeping your expenses lower than your income is also a viable option. Saving money regularly will help you prepare for an emergency and cope with financial setbacks that may leave you in a difficult situation. Also, some communities offer assistance to families going through temporary crises.
Bankruptcy law can be a complicated topic because there are many details involved. It is far from trivial, so always keep this in mind if you are considering filing for bankruptcy. One of the first things you should know refers to bankruptcy types - Chapter 7 and Chapter 13. You should also know when to file for bankruptcy, what conditions must be met to qualify for it, and how to do it. The best thing for a situation like this is to contact a bankruptcy lawyer who will lead you through the whole process.
Even though it is possible to do it all by yourself, this process is too complicated to not be guided by an expert. Remember, the more prepared you are, the better your outcome will be.
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