Declaring Bankruptcy – 5 Must-Knows Before Signing Your Life Away
Saturday, January 11, 2014, 1:00 AM | Leave Comment
For some people, there comes a time where it becomes difficult to pay off debts due to job loss, foreclosure, loans and other financial circumstances. Because of this, bankruptcy may seem like a viable option for those who find themselves overwhelmed by their finances.
Every US citizen has the right to declare bankruptcy in order to reduce or eliminate some of their debt.
However, bankruptcy is not always the right choice for every situation and there are many things that you should know before you file.
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Know Which Type of Bankruptcy to Declare
The most important part of declaring bankruptcy is to learn which type to file. Chapter Seven removes all of your debt, but you lose the right to any property you own. You may be able to retain the rights to certain types of secured property if you make monthly payments. Chapter Thirteen reorganizes your debt and lets you keep all of your property as long as you make regular payments. You will be given up to five years to pay back everything you owe.
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Know What to Expect in Court
For most people who declare bankruptcy, only one court hearing is required. It is officially referred to as the “meeting of creditors”. At this brief hearing, a trustee will interview you and ask basic questions about your finances. Your creditors may also attend this hearing and ask you questions as well.
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Know the Costs
When you declare bankruptcy, there are some fees that you will need to pay. Chapter Seven requires a $200 fee, while Chapter 13 requires a fee of $185. There are usually payment plans available so that you can pay your fee in smaller amounts.
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Know the Consequences
Declaring bankruptcy will have an effect on your credit rating. The filing will stay on your credit report for the next 10 years. This usually means that it will be more difficult for you to obtain new lines of credit and you will be subject to much higher rates of interest.
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Know Where to Seek Help
There are DIY bankruptcy kits available for people who want to file on their own. However, not many people are successful at having their cases approved without the representation of an attorney. Even if you decide to file on your own, at least consult an attorney like Marshall Davis Brown TX for advice.
It is important to research the bankruptcy laws before filing. If you are not properly prepared, you risk losing your case in addition to lots of time and money.
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