Deciding to file bankruptcy is a very difficult decision. If you are unable to pay your bills each month or are facing a vehicle repossession or home foreclosure, it may be time to consider filing for bankruptcy. Bankruptcy allows you to restructure your finances by helping you avoid obligation on some of your debts, while repaying some of your other debts at a lower payment or reduced interest rate. There are several types of bankruptcy, so it is important to talk to an attorney when considering Chapter 7 bankruptcy in Tacoma. Taking Care of Your Debts Without Filling for Bankruptcy If you are behind on your bills and have creditors coming after you, you may not have to file for bankruptcy. There are may people who take care of debts without filing for bankruptcy. If you are being sued by a creditor you do have options that may be worth considering. The best option to consider would be to try and settle your debt with a creditor. Although it is always a good idea to talk to an attorney about possible settlement options, it is possible to settle with a creditor without hiring a lawyer. You may be able to talk a creditor into taking a lump-sum payment that is about 60-70% of what you owe them in total. Some creditors are willing to accept payment plans as well. The hard thing about a settlement is that it is completely up to the creditor whether they accept the terms you offer or whether they are willing to settle at all. Of course if you are being sued by multiple creditors at the same time, then you may have no choice but to file for bankruptcy protection. Chapter 7 Bankruptcy If you need to file for bankruptcy, most of the time a Chapter 7 filing will cover your needs. An individual is able to file Chapter 7 bankruptcy on their personal debts once every 8 years. When you file for Chapter 7 bankruptcy the court evaluates whether or not you have any assets that should belong to your creditors. If they determine that you do, then these assets are given to your creditors, but at that point the rest of your debts are discharged. A discharged debt is not owed by you anymore-whcih means you do not have to pay on it anymore. Although there items that could potentially belong to your creditors when you file, you are allowed to keep personal effects or things that are "reasonable and necessary" to move forward. These include keeping your car, furniture, and other basic items. Chapter 13 Bankruptcy Chapter 13 bankruptcy is the other type that individuals may have to file. This type is typically helpful if you owe money on your home mortgage and are facing a foreclosure. A Chapter 13 allows you to restructure debts that you are behind on so that although you may need to pay on some of them in the future, you do not have to pay on all of them anymore. A court looks at your budget and determines how much you should have to pay per month on your debt. This monthly payment is then divided up and sent to your creditors by a bankruptcy Trustee. Trustees are charged with sending out payments and making sure that creditor are protected when an individual files bankruptcy. Other times, a person may want to file for Chapter 7 bankruptcy in Tacoma, but a judge may determine that they make too much money and then require them to pay back some of their debt through a Chapter 13 case.
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