The problem is most times these companies get you into a worse situation than before. A number of consumer bankruptcy filings occur months, sometimes years after people have been hounded by collection calls and are now being sued by creditors. At this point, a person has no other alternative but to ask the bankruptcy court for relief. If you are already behind on credit card payments, mortgage payments or are being threatened with lawsuits and wage garnishment, bankruptcy can only help improve your situation by eliminating debts you can no longer afford to pay, eliminating creditor calls and collection activity, and getting you back to paying your bills on time and in full.
Most of our bankruptcy clients receive credit card offers within 6 months of filing. And if you want to buy a house you may do so after a year or two. What we do hear our clients say is that they wish they had filed bankruptcy sooner. Filing for bankruptcy is no longer a stigma.
The age-old stigma that bankruptcy is a bad thing and only for the financial irresponsible is no longer. If you have questions on this topic or are struggling with debt , call our law firm today to schedule a free consultation. When looking for a lawyer, Wesley M. Do you feel welcomed and informed? If not, trust your gut and interview other lawyers.
This will be known as Schedule One, so make sure to include any liens against the property. This includes jewelry, collectibles, stocks, retirement savings, and household goods. Make certain to include the value of each piece so the court is aware of the total value of your assets. As soon as you decide to file for bankruptcy, go ahead and consider your accounts frozen. While it may be a well-intentioned gesture, it will only lead to headaches.
Transferring an asset within two years of filing the bankruptcy for no value is considered a fraudulent transfer. Again, best to consult with a quality bankruptcy lawyer before doing anything. If they are, you sign them. Upon filing of the bankruptcy schedules you have invoked an injunction against most creditor collection activity; in other words, they must stop all collection activity.
The purpose of the hearing is to confirm your schedules are true, correct, and complete. Following this meeting, you receive your bankruptcy discharge in about 60 days. Cookie Settings. Learn why people trust wikiHow. Download Article Explore this Article methods. Related Articles.
Article Summary. Co-authored by Clinton M. Method 1. Consider other options. Bankruptcy should only be used as a last resort. Before filing, try other options available to you to pay off your debts.
Contact your creditors and try to negotiate for a loan settlement or a repayment plan with lower payments. Alternately, you can try a short sale of your assets to cover your debt, assuming you are not underwater on your loan.
Try consulting with a debt management agency before deciding to file for bankruptcy. Analyze your debt. Certain kinds of debt cannot be discharged, or erased, even if you declare bankruptcy. Categorize all of your debt and calculate how much falls into categories that cannot be discharged. If the majority of your debt cannot be erased, then bankruptcy may not the right option for you. Note that each state has specific provisions for those assets which are exempt from bankruptcy.
Be sure to check state law. The following kinds of debt cannot be discharged in a bankruptcy: [1] X Research source Alimony Child Support Debts that arise after bankruptcy is filed Some debts incurred in the six months prior to filing bankruptcy Loans obtained fraudulently Debts from personal injury while driving intoxicated Debts from willful and malicious injuries to person or property Some student loans Some taxes Secured loans, as lenders can foreclose on their capital.
Know which assets are exempt from seizure in bankruptcy proceedings. While bankruptcy proceedings will seek to seize and sell off your valuable assets to repay creditors, there are some assets that are protected under state law.
The exempted assets will depend on the type of bankruptcy you are filing for and your state's laws. Assets may be completely protected or protected up to a certain value. Common protected assets are cars, wedding rings, and your home. Some states may offer "wild card" exemptions that allow you to keep any other valuable assets up to a certain amount. Chapter 13 bankruptcy allows you to keep all of your assets, but you can reduce your liability to creditors by selling of assets of significant value.
Understand that bankruptcy does not erase debt for cosigners. A cosigner agrees to pay your debt in the event that you cannot pay. For example, a parent may have cosigned an auto loan for you when you graduated from college because you had little or no credit. However, if you declare bankruptcy, a cosigner on your loan is still be legally obligated to repay your debt.
For example, your parent will still have to repay all or part of that car loan, even if you declare bankruptcy. Learn about the different kinds of bankruptcy. Bankruptcy in the United States is handled in federal court under the rules of the U. Bankruptcy Code. The U. Bankruptcy code identifies several different kinds of bankruptcy. These are usually referred to by their chapter in the U. Bankruptcy code. Property may be liquidated to pay off creditors. Secured debt may be eliminated, or you have the option of allowing the property to be repossessed or paying the creditor a lump sum equal to the current value of the property.
Your income must be below a certain level to qualify for Chapter 7. Under Chapter 13, if you have a reliable source of income, you can propose a repayment plan to your creditors that pays them back over the next three to five years. Municipalities, such as cities, towns, villages, taxing districts, municipal utilities, and school districts can reorganize under Chapter 9.
Understand the Consequences of Bankruptcy. Learn about the kinds of debt that can be erased and what debts will not be forgiven. Recognize the impact on cosigners to your loans. Decide if you can live with the negative impact bankruptcy has on your credit. Evaluate whether or not you even qualify for bankruptcy. If your credit score is high, it will probably take a huge hit and drop significantly. If your credit is already pretty bad, bankruptcy might not lower your score by very much.
If you file for Chapter 13, it may stay on your report for up to seven years. A Chapter 11 bankruptcy will stay on the business's credit report, not the individual owner's, unless they file a personal bankruptcy.
Method 2. Consider hiring a bankruptcy attorney. Hiring an attorney is not required, but it is recommended. Filing for bankruptcy is a very complicated process and is rarely successful without the help of an attorney. Free legal services are available for those who cannot afford an attorney. Filing without an attorney is called filing pro se. If you do decide to file pro se , the court may allow non-attorney preparers to help you.
They can only help you with paperwork. They cannot answer legal questions or provide legal advice. Every state has at least one or more districts. Find out whether or not you qualify. To file for Chapter 7 bankruptcy, your income must be below a certain level. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for.
The bank will either file request with the bankruptcy court to ask permission to retake the car, or wait until your discharge is granted before picking it up.
If you want to keep the car, you can either reaffirm the loan or redeem the car. You have to complete and sign the agreement and return it to the bank within 45 days from your meeting.
The bank files the signed agreement with the court for approval. To redeem the vehicle you have to file a motion with the court and, once granted, buy the car from the bank for its current value.
This gets you out of having to pay the amount left on the loan, but payment has to be made in one lump sum. Upsolve Community Member How difficult is it to do my own chapter 7?
Chapter 13 bankruptcy is another type of bankruptcy available to consumers. The main difference to Chapter 7 is that you pay back some of your debts through the Chapter 13 trustee. This is determined by the means test analysis, your actual income and expenses and the terms of your repayment plan. Since Chapter 13 payment plans can be pretty complicated, anyone considering a Chapter 13 filing should talk to a bankruptcy attorney first.
Most American consumers get their fresh start by filing Chapter 7 and eliminating credit card debt, medical debts, and most other unsecured debt. Filing for bankruptcy takes some preparation. Hiring a good bankruptcy attorney is one way to file. But if you can't afford the attorney fees to hire one and you need a fresh start, Upsolve may be able to help. If you're eligible , our free web app will walk you through the process and help you prepare your forms for filing with the court.
Attorney Andrea Wimmer. Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled Take our screener to see if Upsolve is right for you. Upsolve is a c 3 nonprofit that started in Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app.
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