Realizing that you are in a position that might require filing for bankruptcy is a hard pill to swallow for anybody. It takes a lot of humility to understand that you have screwed up. Filing for bankruptcy usually has a negative connotation associated with it. It is a very long thought-out and difficult decision people make. However, it is important to know what happens when you file for bankruptcy. First when considering whether or not you should file for bankruptcy you will be required to attend approximately six months of credit counseling and at the end you will take a test to see whether Chapter 7 or Chapter 13 is more suited to your needs.
Chapter 7 and Chapter 13 are the two most common types of bankruptcy individuals end up filing with the Court. With Chapter 13 you will set up a specific payment plan including payment and time period to pay back the loan to pay back your creditors on payments that are overdue. The time period used is typically about five years. The Court needs to approve your payment plan and this happens once they have sufficient evidence that you have the financial means to pay the debts back as you have outlined. Often this is the more desirable option as you get to keep your property and work over time to pay things off. On the other hand, with Chapter 7 you have to fill out a bunch of paperwork detailing all of the property you own and assign a value to each item. It tends to be known as liquidation bankruptcy. You then typically have a hearing where your creditors get to determine whether each item should be part of the bankruptcy. A trustee will then take these items and work on converting them into cash to pay back your creditors. Hence the liquidation aspect. It is important to understand that once a bankruptcy claim is filed, an automatic stay is put in place which prevents creditors from furthering harassing you for payment during the proceedings.
A lot of people enjoy this aspect because it can get overwhelming having creditors down your back every day. A month or so after you file your claim, your trustee with meet with creditors to discus your bankruptcy. The trustee acts as the intermediary between you and the creditors so that you don’t keep receiving harassment from creditors. The trustee will go over the paperwork with you and make sure there aren’t any discrepancies with values you have assigned different items of property you listed. Based on your goals, assets, debts, income and expenses filing for bankruptcy can help wipe out most types of debt including credit cards and medical bills, reduce monthly payments, stop creditor harassment, stop repossession of your vehicle, stop the foreclosure of your residence, stop wage garnishments, and even stop the stress caused by debt collectors. Either option you choose, Chapter 7 or Chapter 13, it is important to have an attorney look over things. Kirkpatrick & Associates is a great firm to call. They will assist you in getting back on the right track. Bankruptcy may not be the best option for everyone so it is important to have an attorney go over things with you and help you come to the best option for your situation.