Usually one thought comes to almost everyone’s minds when they hear the word “bankruptcy” and it’s usually nothing welcoming or positive. Unfortunately, there is an extremely negative stigma surrounding the process and people tend to view it as a personal failure. However, we are here to ease your mind about bankruptcy and prove that there are many reasons why it might be a great choice and a painless process for you and/or your family. And remember, it’s nothing to be embarrassed about and you are not alone- roughly 97% of bankruptcies are filed by everyday people rather than businesses. Extremely high medical bills account for nearly 62% of bankruptcies, and in 2016, roughly 800,000 people filed.
Understanding the Effects of Bankruptcy In The Beginning
Yes, there are some negative aspects when it comes to filing bankruptcy, but the positive easily trumps the few disadvantages. If bankruptcy has crossed your mind, you are probably both dreading and procrastinating the process as well as the outcome and the opinion of others. Rest assured that the negative stigma is fading- the highest count of bankruptcies are not due to negligence or a shopping addiction- they are due to financial hardships that people deal with on a daily basis such as job loss or medical emergencies.
The major disadvantage of filing bankruptcy is a drop on your credit score and the bankruptcy remaining on your credit score for up to 10 years. If you file, loans and credit cards will more than likely be unattainable for a few years. The most important thing you can do for yourself right now is to think of the many advantages- no more creditors harassing you and potentially suing you, no more worrying about someone randomly showing up to repossess your vehicle, you can begin rebuilding your credit and your life, and you most likely can discharge your obligation to repay any of your dischargeable debts.
How To File
There are many ways of filing for bankruptcy and different types of bankruptcy to file for. With pre-bankruptcy counseling, we can observe your debts with a close lense at every angle to determine which option is best for you. Our main goal is to help you figure out your best option, eliminate your stress, and make sure you have a clean slate to work with in the future.
After determining the best option, you will need to both fill out and file the bankruptcy forms. From there, we will do the rest of the work for you and all that will be left for you to accomplish is wait for the simple court process, receive credit counseling, and attend the 341 meeting.
Understanding The Different Types Of Bankruptcies
There are two main types of bankruptcies for individuals looking to file- both of which accommodate different situations. Read on to learn about bankruptcy options so you can get a better understanding of the process and be prepared.
Chapter 7 Bankruptcy: The most commonly filed bankruptcy is the Chapter 7. This type of bankruptcy is the discharge of all debts and is considered the “traditional bankruptcy.” A Chapter 7 bankruptcy relieves you of all debts and requires you to either pay off or surrender property that are attached to these debts. However, your property may be exempt during your bankruptcy which means you can keep property. In order to file a Chapter 7 bankruptcy you must not have a sufficient income to pay a portion of your debts. If you do have a certain sufficient income, you may need to file a Chapter 13 bankruptcy.
Chapter 13 Bankruptcy: A Chapter 13 bankruptcy is much different than a Chapter 7. In a Chapter 13, you agree to do both or one of the following- restructuring of your debt payments to make them more manageable (based on your income) and/or get rid of some debt to enable other debt payments to be much easier. Regardless, your weekly or monthly payments will be lowered to make your debt simpler to pay off.
Both of these bankruptcy types are made for individuals in need of debt payment relief and with pre-bankruptcy counseling, we can help you find the best option that suits your needs.
What Happens After Filing Bankruptcy?
After successfully filing for bankruptcy, what’s known as an “automatic stay” occurs, which means that all creditors will be notified that you filed and it will prevent them from taking any further action. A creditors meeting will occur 4-5 weeks after your papers are filed (your court appearance). Don’t be alarmed, it is a simple and regular process that occurs very often all over the United States. The meeting is usually very short and you typically explain your finances under oath.
Soon after, you will be prompted to take a debtor’s education course (another simple task) and upon completion you file the form 423 Certification About Financial Management course with the court. After 3-6 months, you will receive discharge and your automatic stay becomes lifted. When your discharge is granted, a few days or weeks later the case will be closed and you can start over.
The process seems a bit nerve-wracking, but in the right hands it is a safe and easy process that will guarantee your new beginning and enable you to to feel like you can breathe again. Start the bankruptcy process confidently as soon as you can if you feel like your debts have become out of control- your future will thank you.