Considering Bankruptcy?

Contemplating filing for bankruptcy can be a truly daunting task. Understanding that filing for bankruptcy does not make you a bad person or a failure is important. The economy and the housing market have not been kind to many people. Combine this with the loss of a job, credit card debt and medical bills, these factors compound on a person forcing them into a pit that they just can’t get out of no matter how hard they try. This may be the only option that you have to truly save yourself and your credit.

Most people worry about what bankruptcy will do to their credit. The cold hard truth is that if you are sitting there thinking about filing, your credit is already suffering. Bankruptcy can actually be one of the smartest things you can do to restore your financial health. Finding a good lawyer that specializes in bankruptcy is vital to making sure that your case is handled in an appropriate manner and that everything is taken care of. Don’t make the mistake in thinking that you can do this on your own or that any attorney can handle your bankruptcy case. Filing is a complicated process; there are many rules, guidelines and deadlines that must be adhered to so that you are not faced with penalties and fines.

Having a little bit of information as you begin this process can go a long way. You need to know that bankruptcy is a federal court process that was actually designed to help individuals and businesses either eliminate their debt (liquidation) or repay (reorganization) the debt and do so under the protection of the court. Liquidation is termed a Chapter 7 and this type of filing you are asking the bankruptcy court to discharge or “wipe out” your debts. Reorganization is called a Chapter 13 you are giving the court a proposal and plan on how you will repay your creditors.

What should you consider when deciding which type to file? Most likely that will be decided for you based on your income. This is part of the reason it is important to retain an attorney to work your case with you. Your attorney will be able to take a look at your income, compare it to the guidelines and help you decide what you are able to file. Generally speaking though a Chapter 7 eliminates all of you debts, meaning you will not have to repay them ever. A Chapter 13 requires you to repay some debts in full, and other debts are paid only partially or not at all depending on what you can afford.

Most people have the misconception that if they file for bankruptcy they will loose everything they have. In most cases this is not so. Each state has exemption limits, and there are also federal exemption limits. This means based on your martial status there is a certain dollar amount that you are able to keep pertaining to household items, clothing, jewelry, automobiles and housing. An attorney that specializes in bankruptcy law will be able to go through this with you.

Your attorney will spend a good two or three hours with you on your first visit, going over everything with you to help create the best possible filing for you so that you can get back on your feet. The goal of filing either the Chapter 7 or Chapter 13 is not to ruin you and leave you destitute, the goal is to help you get back on your feet and start fresh.

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