Personal Bankruptcy
Bankruptcy: it pays to learn the facts
The good news about bankruptcy is that it is a legal way for people who
can’t pay their debts to get a “fresh start” by temporarily
or permanently stopping your creditors. Bankruptcy works, it is legal and
you can do it by following a simple process – either with the help
of a lawyer or a paralegal service. The bad news is that declaring bankruptcy
will ruin your credit and could even prevent you from buying a home or insurance
or in some cases even from getting a job. And when you are able to reestablish
credit you will likely have to pay higher rates for a mortgage or credit
card because you may be viewed as a higher risk.
Bankruptcy is definitely the debt solution of last resort. Yet, record numbers
of Americans are now declaring personal bankruptcy.
Are you a candidate for bankruptcy?
You may be. If you answer “yes” to these questions, bankruptcy
may be an appropriate solution. Ask yourself these questions and call
us to talk about your answers. Do you have less than $500 per month left
after you pay your normal living expenses (rent, car payment, food, clothing,
insurance and utilities)? Do your debts mainly consist of credit cards,
medical bills, repossessions, and/or wage garnishments? Have you recently
lost your job, or had a decrease in your normal income due to medical
or personal problems? Have you recently divorced or separated from your
spouse and the debts are too much for you to handle?
Will you be totally debt free?
While bankruptcy frees you from many debts, it will not release you from
your obligations to pay child support, taxes, or student loans, for example.
There are two types of personal bankruptcy: chapter 13 and chapter 7.
Both need to be filed in Federal Bankruptcy Court but they have different
structures: Chapter 13 enables you, if you have a regular income and limited
debt, to keep property, such as your home or car where you would otherwise
lose it. Under Chapter 13, the court will approve a repayment plan that
allows you to repay your obligations in 3 to 5 years instead of surrendering
your property for foreclosure. On the other hand, if you declare bankruptcy
under chapter 7 you will be required to liquidate all assets that are
not “exempt”. An exempt property may be your car, tools, and
basic household items. Property may be liquidated by a court appointed
trustee or turned over to creditors. You can only make use of Chapter
7 protection once every six years.
Do you need an attorney to declare bankruptcy?
Actually, you don’t. While most bankruptcy filings are handled by
attorneys, there is no legal requirement. When you file bankruptcy you
will simply file your original petition and the required number of copies
at the bankruptcy court in your area. You can simply walk up to the desk
of the Clerk of Court, hand over your paperwork and pay the required filing
fee. Often, even when you use an attorney, the actual processing work
is performed by an experienced paralegal. So, if you have a simple bankruptcy
and don’t own any valuable assets (stocks, bonds, investment real
estate, jewelry, etc.). you can save money by filing yourself (there are
complete "Do
it Yourself" kits you can buy) or having a paralegal service help
you file. Paralegal
Filing is available for $275. If you own significant assets, it is
recommended that you use the services of an attorney, however.
Remember: Even though it is easier than ever before
to declare bankruptcy, it is a serious decision and you need to make sure
that you explore all other alternatives to learn if a less drastic action
makes sense for you.
Call today or fill out our form
To find out more about the alternative solutions to bankruptcy, please
complete this simple form. Or call toll free
Monday thru Friday 12pm to 6pm EST at (800) 583-2043
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