If you’ve never had any dealings with filing bankruptcy, the process can seem quite overwhelming. The best way to handle the situation is to prepare yourself with lots of pertinent information regarding the process.
If you already know what to expect, you can take action to help the process along. Take a moment from your day now to start the process of enlightenment, and read through a few tips that everyone should understand about filing bankruptcy.
The two main types of bankruptcy
There are more than two ways to file bankruptcy, but as an individual, you really only need to know about two of them. Chapter 7 and Chapter 13 bankruptcy are most commonly the route of individuals when it comes to filing.
Filing Chapter 7 bankruptcy is commonly called the “liquidation” bankruptcy. You’ll get rid of most of your debts, but at a calculated cost. Chapter 7 may require you to surrender various assets.
Chapter 13 bankruptcy doesn’t simply wipe your debts. Filing Chapter 13 bankruptcy means that your debts will basically be consolidated. You’ll still have to pay them off, but you’ll have one monthly payment to make it more manageable.
You need a good bankruptcy lawyer
It is possible to file bankruptcy without a lawyer by your side, but it’s not recommended. If you have a complicated financial situation, you’ll want the expertise of a bankruptcy lawyer to help guide you through the process of filing bankruptcy.
However, you do need to know that your legal fees will have to be paid in full for your bankruptcy to go through without issue. Legal fees are not a part of the bankruptcy, so they can’t be lumped in with the rest of your debts.
Know how bankruptcy will affect your credit
It’s good to understand that bankruptcy is a hard hit to your credit. There’s no way to sugar-coat the situation. Bankruptcy can linger on your credit reports for up to ten years, so make sure it’s the right decision before jumping into the process.
Understand that your privacy will be intruded
Filing bankruptcy means that your privacy is a thing of the past for a while. The court and your lawyer will dig through everything they can get their hands on regarding your financial comings and goings, so be prepared to bare your soul.
Bankruptcy doesn’t magically wipe your debts clean
Don’t go into filing bankruptcy with the hope that it will simply wipe away all the debts you have accrued in your lifetime. Not everything is covered under the umbrella of bankruptcy. Debts like back taxes and child support are not included in your bankruptcy case, and will still need to be addressed individually.