The most common type of consumer bankruptcy is Chapter 7 Bankruptcy. There are many different kinds of bankruptcy, but when most consumers consider the topic, this is the type they are probably most familiar with. Each type has different rules, regulations, guidelines and requirements.
The typical consumer might consider filing bankruptcy when they have a mountain of debt that they cannot ever see themselves getting out from under. This is usually not due to financial mismanagement, but an unexpected change in circumstances, such as a job loss, divorce, high medical bills, and other things that the consumer has no control over.
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Despite what your friends may have told you, this process is not going to be easy. In past years, filing bankruptcy was almost as easy as it is in the game of Monopoly, and required little more effort. But today there are massive numbers of forms to be completed with very detailed information about your debts that goes into the filing.
This mountain of forms and applications needs to be completed, correctly, in detail, but even that does not guarantee you can file bankruptcy. The bankruptcy courts will look at your documentation and finances in great detail before they will approve it. Yes, it needs to be approved, and there is a chance that you will not be able to file bankruptcy if the court does not approve it.
You need to have a good understanding of where all your debts come from. There are some types of debts, such as an IRS lien or student loans that cannot be discharged by filing bankruptcy. If a large percentage of your overall debt is the type of debts that bankruptcy will not discharge, you have little to gain by filing.
Another disadvantage that you may have already thought of is the fact that a bankruptcy filing is going to stick out like a sore thumb on your credit report for the next 7 to 10 years. That does not mean you will not be able to get credit at all after your filing, but you will definitely find it more difficult and challenging to get credit, and the interest rate you will be charged will be higher, reflecting the fact that the lender knows about your filing and is considering you a higher risk.
Are you really prepared to liquidate or sell off most of your assets? That is a requirement of Chapter 7 bankruptcy and there is no way around that. One option is to consider a different chapter, but then with the other chapter of bankruptcy that is typically used for consumers, your debt is not wiped out, but rather merely reorganized at lower interest rates and lower monthly payments. While this may give you the financial breathing room you need, your debt remains, although your assets are not sold off.
Filing Chapter 7 bankruptcy is not an easy task, and especially with the new laws, it is highly recommended that you use a reputable bankruptcy lawyer to handle the paperwork for you, as well as making intelligent suggestions and even looking at alternatives. The money you spend for the attorney will likely more than pay for itself in terms of the time you invest as well as the assets you are able to retain after all is said and done.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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