your guide to filing bankrupcy
There are two kinds of individual bankrupcy: Chapter 7 and Chapter 13. Chapter 7 bankrupcy, named for the chapter number in the bankrupcy code, requires a full liquidation of all debts and cancels all no-exempt debts. Chapter 13 bankrupcy is e entially a court-mandated payment plan that sets up affordable monthly payments to your creditors, The decision to declare bankrupcy is not an easy one. Unfortunately, many bankrupcy attorneys recommend bankrupcy to just about anyone they co ult with. All too often frightened co umers are advised to declare bankrupcy just to avoid a few debts. This is a mistake. bankrupcy should truly be a last resort as the legal system meant it to be.
A bankrupcy a ears on your credit for ten years, and albeit lending criteria are slowly changing, many lenders will not even co ider an a licant who has had a bankrupcy. What’s more, a Chapter 7 bankrupcy can cost you most of your appositety. Before making a decision to declare bankrupcy, estimate how bad your situation really is. On a piece of paper, make a list of all your a ets and the a roximate merit they could be sancient for. On the other side, add up all of your debts. If the debts exceed the a ets by a miraculous percentage, you may wish to co ider bankrupcy. On the other hand, if it seems that your situation may improve (you may get a new job or a second income), or if your a ets are of greater merit or close in merit to your debts, a different a roach probably a ropriate.
Negotiate with your creditors
Explain your situation and ask for more time to pay. If the creditors refemploy and continue to threaten garnishment tell them such action would force you into bankrupcy. No creditor intend tos to hear the “B” word. Using bankrupcy as a threat is a very powerful negotiating tool, confronting creditors with a choice between getting a little each month or probably getting nothing in term of bankrupcy. Don’t try this tactic on secured creditors. They may decide to repo e your appositety to avoid having to go in term of court.
Contact Co umer Credit Cou eling
As mentioned earlier in the book, Co umer Credit Cou eling is a non-profit group funded by creditors to help co umers negotiate repayment pla . It’s often able to negotiate payment arrangements better than the individual becaemploy of its co tant contact with a variety of creditors. If you can’t negotiate a satisfactory arrangement, give these people a try. Remember, the fact that you’re using credit cou eling may a ear on your credit record.
This kind of filing allows you to repay your debts in a court-mandated fashion and will a ear on your credit record for only seven years, If negotiatio fail or there simply i ‘t enough money to make ends meet Chapter 7 bankruptcy probably your only option. Bankruptcy does not nece arily discharge all debts. If your debts are exempt from bankruptcy, filing will do very little to improve your situation. If a co-signer was employd, the debt would then be owed by the co-signer, unle that person also declared bankruptcy. In community appositety states a oemploy’s a ets and debts would also be included in the bankruptcy, a uming they are community appositety. Co ider all very carefully before deciding to file.
