Navigating through life is really all about doing your best to make sound decisions. This is true of your personal life, your professional life and your finances. Sometimes, even with the best of intentions, you have to make tough decisions. When those times come around, you need assurance to make sure that you choose wisely. This is very true for people who are facing serious financial difficulties. When you have to decide whether you should get drastic and file for bankruptcy, or deciding on a more viable, realistic option, it is not always easy to tell if you are making the right choice. It is smart, when making any kind of a choice, to get as much information on the matter at hand as possible. Keep reading to find crucial information about the bankruptcy process and how to determine if pursuing a bankruptcy filing is the right thing to do.
How do you file for Bankruptcy?
Even getting the ball rolling, for those who have decided to file for bankruptcy, can be a confusing process. There are really two methods that you can choose from. The best way is to voluntarily file, with the second option being to ask creditors to ask the courts for you to file. Either path can be taken on your own, with assistance from a more knowledgeable source or by hiring a lawyer that specializes in personal bankruptcy cases. Most individuals will choose to at least get the opinion of a professional, and most people will wind up filing one of the two filing types of bankruptcy, if filing is deemed to be the right thing to do.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a popular option. Many times, when people face financial hardships, like losing a job, overextending their credit or even a divorce, they opt for Chapter 7. This type of bankruptcy liquidates the person’s assets to pay off as much outstanding debt as it can. Cash made from the liquidation is passed out to creditors, like credit card companies and banks. Four months after the filing is official, you get notice of discharge. This stays on your credit report for about ten years.
Chapter 7 bankruptcy, however, may not be best for everyone. Assets are taken away, and that can include the family home, cars and other important property. Be sure to speak with a bankruptcy professional if you qualify for this type of filing and decide to go down this path.
Chapter 13 Bankruptcy
People who want to hold onto their property often choose Chapter 13 bankruptcy. This type of bankruptcy is commonly known as a “reorganization bankruptcy. It allows you to pay off your debts over 3 to 5 years. People who have regular income find that this type of bankruptcy gives a nice grace period. Any of your debt that is left over after this period is discharged. The courts force debt collectors and creditors from hassling you, so you get a bit of protection, time to pay off debts and a fresh financial start.
Should you file?
Everyone has to carefully go over their income, debt and other financial issues prior to making this decision, and it’s best to consult with someone who handles these issues for a living to discuss all of your options. If it comes down to filing for bankruptcy, though, don’t consider it as a failure. Bankruptcy laws were created to essentially give people a second chance. Mistakes happen and bad circumstances can lead anyone to the point of financial desperation, and bankruptcy may very well prove to be a saving grace during these times for people who need the chance to start over and protection from pushy debt collectors.