View Alternatives Before You File Bankruptcy

In today's financial state many people are stressed with finances and how to defeat so many bills and weakened employment. There are various possible options to debt problems. There is out of court settlements with the creditors by reaching some type of agreement to pay off the bills, or debt counseling where a company can assist with getting lower interest rates for your bills, or there is a debt consolidation loan, where money is borrowed against the equity in a house, or the ultimate choice which is filing bankruptcy.

Reasons for Filing Bankruptcy

Many people file bankruptcy as a last resort due to medical expenses, credit card bills, unemployment, divorce, or the fact that they were not eligible for any of these plans. There are two major types of personal bankruptcy that may be filed; they are Chapter 7 which requires a liquidation of assets to pay off bills, or a Chapter 13 which involves a three to five year repayment plan to the creditors.

Really, the act of filing bankruptcy should indeed be your selection of last resort, if for no other grounds than the long term and strong impact doing so will have on your credit for the next seven to ten years. Generally, there are better alternatives you should evaluate, irrespective how hopeless your particular financial position appears to be.

Process of Filing Bankruptcy

Filing for bankruptcy involves first consulting with a bankruptcy attorney. The following steps include finding a copy of the debtor's credit report, gathering tax returns for the last few years, gathering deeds, titles and loan documents, etc. The attorney, after assessing all of these papers, will talk over the alternatives and the future steps. Next a petition will be filed with the courts and a statement of assets and liabilities will be presented with a list of creditors attached to the courts. If a Chapter 7 is decided, the charge to file this is about $200; for a Chapter 13 the charge is about $185.

Once all of the paper work is processed, the courts will set up a stay into effect which will stop creditors from contacting the debtor, and it will also stop the creditors from acquiring your property. About a month after all of this is complete a meeting will be called in the form of a court date and the lawyers for both sides and the debtor will be present, an arrangement is made at this time. Once everything is nailed down and agreed upon the courts will discharge the bankruptcy. A bankruptcy can stay on ones credit report for as long as 10 years.

Conclusion

Do not try to do this on your own. The operation of bankruptcy is very complicated and the laws vary from state to state. People who have filed in the past have stated that if they had to do it over again, they would unquestionably use a lawyer, since doing so saved them a great deal more than the legal charges after all was said and done.

Deciding to file bankruptcy should be a task that is looked into very carefully and it should only be done after every other viable alternative has been exhausted. Filing for bankruptcy can make it challenging to get a car, furniture, appliances etc. Any type of large purchase can be affected by a bankruptcy.