Things to Know Before Declaring Personal Bankruptcy
Is your current financial situation driving you crazy? If your bills are piling up and you can’t think of any other way to clear your debts, you’re probably considering declaring personal bankruptcy. Filing for personal bankruptcy might be a better, and the only way to get out of your financial situation. Fortunately, bankruptcy is a legal process suitable for anybody unable to pay bills and debts. It can help you to wipe out your current debts and re-organize your finances.
However, filing for bankruptcy is not as easy as it may sound. The process is not only complex but can be confusing and expensive. Ideally, people’s bankruptcy experiences are different, so it may be hard to find someone who can give you a clear picture of what will happen after the case. Here are crucial things to know before declaring personal bankruptcy to help you better prepare for the process.
Bankruptcy Forms are Complicated
Filing bankruptcy is not as easy and straightforward as many people might perceive it. It is often based on complicated forms and other paperwork, just like the tax return forms. Mostly, these forms come with complex questions regarding your financial details. So before filing for bankruptcy, make sure you take adequate time to analyze, understand, and fill the forms. However, you may need to find an experienced bankruptcy lawyer to take you through the information and help you complete the forms correctly. Getting an expert attorney can simplify the process and help you avoid major mistakes that can cost you money, freedom, or even your assets. Click here to find an experienced, professional bankruptcy lawyer near you whom you can trust.
Bankruptcy is Not an Easy Process
As you prepare to file for bankruptcy, it is essential to note that it is not an In and Out process. Bankruptcy cases operate differently from small court claims, which usually conclude in a few days. There are two primary bankruptcy options to choose from; Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 7, mostly known as ‘liquidation’ bankruptcy, will discharge almost every unsecured debt, including credit cards and personal loans. However, you’ll be required to have a specified amount of income, sell non-exempt assets, and pass a ‘means test.’ The entire process lasts up to four months, and filers are allowed to keep most of their assets.
On the other hand, Chapter 13 (reorganization) bankruptcy will put you in a repayment program and make you pay back your debts over time. Although it doesn’t require property liquidation, the whole process might take up to five years to finalize. To qualify for Chapter 13 bankruptcy, you must have a regular income to cater for the required monthly expenses.
Complete Disclosure and Honest are Critical Requirements
Complete honesty is essential when filing for bankruptcy. The courts require that only honest creditors can discharge a debt. Therefore, you must provide a list of all your creditors, debts, property, and assets. Remember that if any dishonesty is identified, you risk losing your bankruptcy case. Furthermore, bankruptcy fraud is considered a serious and punishable federal crime.
Bankruptcy Paperwork Filings and Finance Scrutiny are Public
If you decide to file for bankruptcy, you should be ready to go public. All the filings and your finances will be subject to public scrutiny. If you don’t like discussing your income or financial status to your family or friends, you might as well embrace the fact your financial life will be public. In case you want to file for bankruptcy protection, chances are you will be required to file for additional paperwork known as bankruptcy schedules. This extensive package will list your assets, expenses, debts, income, and current financial transactions.
Declaring Personal Bankruptcy can Affect Your Credit in Future
After a bankruptcy case, it will take you about two years to start recuperating from a Chapter 7 case. At this time, almost all creditors will turn you down. However, you will still get loans from those lenders who might want to take advantage of the situation and charge you higher rates for credit extension. Improving your credit score is another uphill task once you’re through with your bankruptcy case. To accomplish this, you may need to take small amounts of loans to repay them strictly based on the terms. This way, you can avoid acquiring more debt and maintain a good credit score.