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If you are finding yourself in financial difficulties, you may need to look at the option of filing bankruptcy. You will want to evaluate your situation carefully and determine what the best steps for you to take are. Sometimes bankruptcy is necessary, but it can be scary. The laws are regularly changing in this area and they do allow for some benefits as well as some drawbacks. You are going to want to have an expert give you advice as you make this decision. Look for help from a Chesapeake bankruptcy attorney, or from a lawyer in your area. Talk with them about your finances and make sure it is the best option for you before you proceed. Bankruptcy Options There are several types of bankruptcy, but there are 2 primary options. You will want to know the differences and which you may utilize: • Chapter 7 is commonly known as a liquidation bankruptcy. It will allow you to discharge your unsecured debt, such as loans and credit cards. There is a certain level of income that is considered and you may have to sell some of your assets. Typically you are able to keep most of your things and it is done fairly quickly. You, for the most part, start with a clean slate. • Chapter 13 is called a reorganization bankruptcy. This option will allow you to set up a repayment plan to your creditors. You will be required to pay them back over a certain period of time and none of your assets will be liquidated. This will generally take 3 to 5 years to complete. You will need to make a certain income and make required payments. Your assets and your income will dictate which option you can use. If you make too much money, you won't be able to do a Chapter 7, and a Chapter 13 may be best if you want to protect non-exempt assets. An attorney will be able to help you determine which is best for you. Depending on your circumstances, you may even be eligible for free legal counsel. Effects of Bankruptcy A consideration you will want to think through is that bankruptcy will wipe out any good credit rating that you currently have. In one quick action, you will have a negative impact on your credit that will last up to 10 years. You are also required to declare your bankruptcy filing to future employers, on medical forms, and on many official government forms. In other words, this will follow you around for the rest of your life. Based on this, you will want to make sure this is your last option. Future lenders will take this into consideration when you are applying for a mortgage or loans for cars or education. Bankruptcy filings are also public and you should be aware of that. Other Options Even if you do file for bankruptcy, not all debts are eligible to be discharged. You will find that there are some that you will still be responsible for. There are other options to consider before and after you file: • Loan refinancing is one option. It is possible that your financial institution may work with you to restructure your loan and lower your payments. That alone may make it more manageable for you to meet your obligations. • Consolidating your credit cards into one single loan can be helpful also. • Credit counseling is another great option. This gives you access to a financial coach that can help you with budgeting, financial education, goal tracking, learning to change your spending habits, and ways to eliminate your debt. As much as you may wish for bankruptcy to be a cure-all, it is not. You may lose some of your assets and your personal finances will be gone through. It is important to have a Chesapeake bankruptcy attorney, or one from your area, help you in this process. They can advise you about the best course of action now and for the future.
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