Getting A Grip On Chapter 7 Bankruptcy
The most common type of consumer bankruptcy is Chapter 7 Bankruptcy. There are many different kinds of bankruptcy, but when most consumers consider the topic, this is the type they are probably most familiar with. Each type has different rules, regulations, guidelines and requirements.
This is something that a consumer might consider when they have a mountain of debt that they cannot see over the top of. Although there are usually other options, this usually comes about from your current circumstances, which interestingly enough in the majority of cases, is not due to financial mismanagement.
You need to be aware, however, this is not going to be a cake walk. Although filing bankruptcy in past years was quite simple, it now requires a massive amount of forms to be completed and takes months to go from start to finish. It is not something that can happen overnight, so it will take significant planning on your part.
This mountain of forms and applications needs to be completed, correctly, in detail, but even that does not guarantee you can file bankruptcy. The bankruptcy courts will look at your documentation and finances in great detail before they will approve it. Yes, it needs to be approved, and there is a chance that you will not be able to file bankruptcy if the court does not approve it.
You need to have a good understanding of where all your debts come from. There are some types of debts, such as an IRS lien or student loans that cannot be discharged by filing bankruptcy. If a large percentage of your overall debt is the type of debts that bankruptcy will not discharge, you have little to gain by filing.
Another factor to consider is that a bankruptcy is going to stick out like a sore thumb on your credit reports for the next 7 to 10 years. This can affect your ability to be considered for a new job and open new credit accounts. While you will still be able to get credit, you will need to prove yourself all over again, since you are now considered high risk and the interest rates you will be assessed will be much higher than normal.
Have you thought of how your life will change if you need to liquidate most of your assets? That is what is required with certain chapters of bankruptcy, where your assets are sold off in order to satisfy your debts. Other chapters do not require asset liquidation, but then your debts are not wiped out, but merely reorganized at lower payments and lower interest rates to make is easier for you to meet the obligations.
Especially in light of the recent changes in the bankruptcy laws, you are strongly encouraged to work with a qualified bankruptcy attorney when doing this. They can help with the paperwork, advise you as to what to expect, and also outline other possible options and alternatives you may not have thought of. The money spent on an attorney can more than pay for itself in terms of time spent and potentially assets not liquidated.
Article Source: http://www.search-raven.com
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by: JayAnderson
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