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Bankruptcy
IS FILING BANKRUPTCY THE RIGHT CHOICE FOR ME?
Factors Favoring Bankruptcy:
A number of factors should be considered when thinking about filing for bankruptcy.
One important factor to keep in mind is that if you file for bankruptcy now and need to file again, you’ll have to wait eight years.
Some “pros” of filing bankruptcy are:
*Your debts such as credit card debt are “discharged,” or removed.
*Your home, car and certain other property can’t be taken to pay creditors.
*You can eliminate or modify “secured debt” like a mortgage or car loan.
*An “automatic stay” protects you from future collections processes such as repossession, foreclosure and utility shut-off. A creditor that violates this can be held in contemp and ordered to to pay you money for damages you’ve sustained from these action and for attorney’s fees that may arise.
*You may keep your driver’s license if you were going to lose it due to nonpayment of an auto accident judgment against you
Chapter 13 bankruptcy may save you interest charges on unpaid tax bills.
*You are protected from discrimination by governmental groups or private employers. For example, a public utility can’t take action against you for an unpaid utility bill nor can you be denied a student loan. You also can’t be fired from your job.
*You have more legal tools to challenge disputed debts with creditors.
Factors Against Bankruptcy:
Be sure to look at the “cons” of bankruptcy as well. Filing without knowing what’s at stake for years to come could be harmful.
Here are some things to consider:
If you own nonexempt property (i.e. property that doesn’t fall into the exempt category under bankruptcy law), it could be liquidated or sold to pay off creditors. Examples of nonexempt property include family heirlooms and vacations homes, to name a few.
It’ll become part of your credit history for 10 years and will be part of the public record.
You could be discriminated against in spite of the protections provided by a “legal” bankruptcy. Creditors may not be willing or able to extend credit for many years after a bankruptcy has been filed due to their "borrowing" guidelines.
Public record of the bankruptcy could mean that your reputation may be harmed.
The costs of filing bankruptcy can be steep even if you don’t have an attorney representing you. Court fees, trustee’s fees, consumer counselor and personal financial management education must be paid.
Put aside your personal feeling about bankruptcy and whatever you think about people who have filed. Whether or not you file is up to and your family,and no one else.
Is Bankruptcy Necessary?
Only you can decide if bankruptcy is right for your situation. For many, who face problems that bankruptcy can eliminate, it might have a positive effect on their life. However, if you have a few debts, filing may be premature when it’s possible to speak to a debt relief specialist to negotiate with your creditors on your behalf.
Questions for Your Attorney:
Are there ways to work with collectors safely before filing bankruptcy?
What property can I keep if I file bankruptcy?
When is the best time to file bankruptcy?
More Information
WHAT IS A CHAPTER 7 BANKRUPTCY?
Sometimes called a straight bankruptcy a Chapter 7 is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose, so Chapter 7 will give that person a relatively quick “fresh start”.
One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts.
The decision to file for bankruptcy is a very personal one, and it’s one that should not be made until you have reviewed all of its pros and cons. Remember, too, that bankruptcy not only gets rid of many of your debts or manages them more effectively, but it has lasting effects on your financial future – positively and negatively.
WHAT IS CHAPTER 13 BANKRUPTCY?
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter 13 bankruptcy is filed by individuals who want to pay off a portion of their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.