Declaring bankruptcy can be a daunting prospect. Be that as it may, it’s usually the only viable solution for individuals with insurmountable debt or those plunged into utter financial ruin. Filing for bankruptcy is a lengthy, complicated process. It’ll take a great deal of perseverance, effort, and transparency if you hope to rid yourself of your debts and start anew. To help you turn over a new leaf, here are the most important things to consider when declaring personal bankruptcy.
The Two Types of Bankruptcy for Individuals
Personal bankruptcies in the United States fall into either one of two categories. Here’s a brief run-through to understand their characteristics:
Chapter 7 Bankruptcy
Filing for this type of “liquidation” bankruptcy aims to discharge your unsecured debts including credit card debt, personal loans, and such. The process lasts 3 to 4 months and requires a certain level of income. While you may need to sell non-exempt assets, you’ll be able to keep most of your assets.
Chapter 13 Bankruptcy
Also referred to as “reorganization” bankruptcy, Chapter 17 filers are set up on a long-term plan to repay their creditors, similar to debt consolidation. It takes 3 to 5 years on average. No assets are required to be liquidated, but you’ll need proof of regular income for honoring your monthly dues.
Full Disclosure is Imperative
Bankruptcy courts have established that only honest and transparent debtors are entitled to a full or partial discharge of debt. As such, it’s essential that you list all your debts, creditors, properties, and other relevant assets during the filing process. If discrepancies arise in your case, you might end up foregoing your eligibility, being investigated by the FBI, and dragged to court for bankruptcy fraud.
Declaring Bankruptcy Isn’t Easy
Evidently, completing bankruptcy forms isn’t the same as filing for a tax return. There’s a myriad of details and procedural handlings that you must be aware of to maximize your chance of success. As the Ohio-based bankruptcy specialists at https://www.amourgis.com/bankruptcy-lawyer/ explain, hiring a specialized attorney to walk you through the process is crucial. Not only will they empower you and counsel you on the best course of legal action, but their expertise is also necessary to avoid common pitfalls that might jeopardize your case. Whether you live in Cincinnati or Atlanta, some research should point you towards a team of competent and experienced legal eagles that can help you out.
How Much Does It Cost?
Many people don’t realize this, but declaring bankruptcy is no cheap affair. Between case fees, lawyer expenses, and more, the process might set you back tremendously. While that may sound odd for someone who’s already struggling financially, there is a price to pay to get your head above water. That said, you can always petition the court to have your filing and procedural fees waived in case your income falls under a certain threshold.
Bankruptcy Opens You to Public Scrutiny
In the spirit of transparency mentioned earlier, it’s important to know that declaring personal bankruptcy places you under public scrutiny. The process notably involves a thorough review of your bankruptcy schedules including income, expenses, credits, loans, assets, and recent financial transactions. You’ll be expected to attend a meeting with creditors who will ask you open questions in a public room setting. Needless to say, this can be a difficult and embarrassing obstacle for many individuals. Bottom line, ready yourself to have the details of your financial life exposed.
Not All Debts Can Be Discharged
As dire as your predicament might be, be aware that applying for bankruptcy protection isn’t a magical remedy to all your financial issues. In fact, not all debts will automatically and fully be discharged should you obtain a favorable court ruling. This notably goes for overdue taxes, alimony expenses, or child support checks. For that reason, it’s advised to consult with your attorney or a financial planning expert to find suitable alternatives.
Bankruptcy Will Affect Your Credit Score
Lastly, but most importantly, understand that filing for bankruptcy can impact your credit score in a severe and lost-lasting way. Any history of good credit risks being wiped out and your bankruptcy status will most likely follow you for the next 10 or years. It can make getting back on your feet a very challenging task (with employers, financial institutions, insurers, government reports, etc.). That’s perhaps the one aspect that deters so many people from taking the leap and seeking bankruptcy protection.
Bankruptcy is a harsh reality to face, but in many cases, it can be the only way to regain control over your finances and start fresh. Ultimately, with all the paperwork and filing procedures involved, enlisting a specialized lawyer to advocate on your behalf will go a long way in maximizing your chances of success.
