Bankruptcy 101: Is A Personal Bankruptcy For You

Have you ever felt like you’re at the end of a rope, doing the routine of paying your debts again and again but you don’t see any progress? Have you taken every measure there is to settle your financial issues, but they seem not to take effect? Have you thought filing for bankruptcy as the only option left?

While personal bankruptcy is an effective route towards discharging large debts, you should determine whether or not it is right for you. Filing for it is not just a decision that concerns you financially; it is also personal and emotional. The process of declaring bankruptcy entails more than just filling out paperwork. It’s a decision that needs serious consideration because its effects can haunt you for the years to come.

To determine if personal bankruptcy is the right choice for you, let us introduce you to our list of factors that need consideration.

  • Analyze your bankruptcy options and other alternatives

In the US, you have two bankruptcy options:

  • Chapter 7 – This type of bankruptcy can discharge most of your debts in a period of three to six months. The downside of this proceeding is you can lose some of your personal property such as your house. There are also some debts that can’t be covered by this type; among them is student loans.
  • Chapter 13 – More complicated than the first, this type of bankruptcy requires you to develop a repayment plan based on the amount you earn. The plan will show how you’re going to repay your debts over the next three to five years.

If you decide that bankruptcy is not ideal, you can also check some alternatives like making a change on how you deal with your finances or if you’re judgment-proof.

  • Determine your eligibility to file

As mentioned, some requirements need to be met when filing for bankruptcy. For example, you’re not eligible for Chapter 7 bankruptcy if your earnings are high enough to pay your debt under the Chapter 13 proceeding. To learn more about these requirements, check this out.

  • Find out what will happen to your properties

As mentioned, you might lose your home if you file for Chapter 7 bankruptcy. What happens to your other properties such as your car will depend on the property exemption laws available as well as what you’ve done with the property, like putting it up as collateral for a loan. Remember that with regards to exemption laws, certain property types are not covered.

  • Be prepared for it

If you decide to declare bankruptcy, be aware that it will invade your personal life. You may have to show to the court every aspect of your finances. Depending on the bankruptcy type, your properties may be taken and sold to pay off your debts, or you’ll need to ask permission to spend your own money for the next few years to come. You also need to be prepared to have other people learn about your bankruptcy as this can have a negative impact on you emotionally and psychologically.

Before filing for bankruptcy, you must first study every aspect of it. You can learn more about the implications of personal bankruptcy by consulting an expert bankruptcy lawyer who can explain the possible complications of your situation. Contact an expert attorney for advice at today.