Repair (MP) Most financial advisors believe you shouldn’t think of filing bankruptcy unless it is impractical to organize a plan to repay your creditors on your own or with the assistance of a debt counselor. The stain of a personal bankruptcy can last as long as ten years, and that’s quite a while. It not only makes acquiring a mortgage or refinancing one very challenging and affects your future job prospects, with many employers now checking potential employees credit statuses.
Available options for filing bankruptcy
If You’re considering filing a bankruptcy – you should understand there are two types available to you, Chapter 13 and Chapter 7:
Chapter 13 bankruptcy – allows you to repay your debts, sometimes at less than their full value, underneath a court-approved plan over three to five years. With a Chapter 13, you submit a financial budget to the court and all of your earnings that exceed those budgeted expenses goes to your creditors. You may even be able to keep all or part of your assets. When filing bankruptcy of this type of bankruptcy is a good idea if most of your debt is secured debt, for instance, mortgage or car loans.
Chapter 7 bankruptcy – Most experts call this a straight bankruptcy. The court liquidates most of your assets and works out the proceeds to repay your creditors. The process is often over within six months. It will not eliminate some kinds of debts, however. These include certain loans, liens, on many secured debts, most taxes, alimony, and child support.
Filing bankruptcy under Chapter 7 under the federal bankruptcy laws may let you keep some or all of the equity in your home, your car and smaller amounts of personal possessions, like household goods and jewelry.
Some states have more lenient Chapter 7 exemptions than those allowed under the federal bankruptcy code. You might be able to file under those state guidelines, so check with your state.
Filing bankruptcy in many instances is a complex process. So, hire a good bankruptcy attorney to assist you. The best way to find one is to ask a lawyer you may have used in the past to give you a recommendation. You can also get referrals from your local chapter of the American Bar Association’s Find Legal Help page or online search.