Bankruptcy For Debt: Is It Really An Option For You?
Disclaimer: The contents of this article should not be taken as legal advice and should only be used as a resource to provide information about bankruptcy for debt. You should always seek the services of a lawyer specializing in bankruptcy cases to give you a more in-depth view of this matter.
You’ve been struggling with your finances for quite some time now. The things you usually enjoy – like hanging out with friends, splurging with your guilty pleasures once in a while – are all long gone. You can’t even remember the last time you did all of these! For the past months, you haven’t been able to pay some of your bills. And even if you have a job right now, you still can’t make ends meet. Because of this situation, you decided to acquire different kind of loans from banks as an attempt to solve all of your financial woes. This was your first time applying for loans, and since you have good credit standing, your application got approved immediately, and you were able to get the money. At first, everything was running smoothly – you were able to pay your bills and all existing payables, but as weeks passed, you’re now finding it hard to pay for your loans. You owe a lot to several banks and finding the appropriate resources to pay all of these is a struggle for you.
Your situation is not unique. Many people apply for loans to pay for their existing debts but in the long run, this move added in even more debts for them to pay. You, along with most of the people out there, have been caught in the cycle of paying never-ending debts. With this, you might feel stuck and are considering filing bankruptcy for debt. You think that your situation calls for it. But before you actually do just that, consider these things first:
- There are two main types of personal bankruptcy: No, bankruptcy is not the same at all levels. There are two main types of bankruptcy which you can make use of, and each of this is different in some ways. Before you file for bankruptcy for debt, you should learn this information to know which type of bankruptcy suits your situation.
- Chapter 7 allows you to walk away from your debts entirely. This is appropriate for you if you have too many debts and your income is too low to pay for all of these. There are a lot of procedures involved for Chapter 7 bankruptcy.
- If you think that you can still pay your debts, but in a longer period, Chapter 13 is the one you should consider. With Chapter 13, you’ll be able to draft a plan for you to repay all of your debts for over five years.
- Bankruptcy goes on your credit history: Everything you do with your financial life right now can greatly affect you in the future. And filing for bankruptcy for debt is a record that would go into your credit records.
- Your credit card or loan application in the next ten years might be affected adversely once you file for bankruptcy. If you’re certain in applying for bankruptcy, consider the setbacks and make sure that you manage your finances well as your options for help might be limited.
- Filing for bankruptcy is public: You might think that personal bankruptcy is done solely between you and another party, but you’re wrong. Once you file for bankruptcy for debt, everyone will potentially know that you did that.
- Courts would post online, and in the newspapers also share who has filed for bankruptcy so if you’re leaning towards this direction, you should be ready for this. This can affect your future endeavors such as your job applications.
- Your financial situation will also be broadcast to the world if you file for bankruptcy. Many people, organizations, and banks would now know that you’ve been struggling financially and that you may not know how to handle your finances well.
- You’ll be required to take classes: It’s not always about the paperwork if you’re filing for bankruptcy. Aside from the tedious process of applying, you’ll also be required to attend classes before your application will be approved.
- You’ll be required to take a 90-minute class discussing credit counselling. Before bankruptcy is concluded, you’ll also take another class which will last for two hours.
- You have the option to take this class in person, online or via phone. You’ll also be paying a fee of not less than $50 before you can attend these classes.
The list presented in this article will help you determine if bankruptcy for debt is the best way for you to go. Sure, your main intention of doing this is because you want to pay your existing debts, but you should consider a lot of things first. And you should know all of these so that you would not be adding more to your problems. You want bankruptcy to improve your financial standing and not do the opposite, right? Take your time to study the pros and cons that bankruptcy can give you and decide if this is really the best option for you.
Bella Flanagan has dedicated much of her life to law, and her pieces as a writer are imbued with her wisdom obtained from over 20 years of experience in business. Bella enjoys hanging out with her grandchildren when she has the free time.