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Before you file bankruptcy


If you have more debts that you feel you are able to repay on your own, bankruptcy can be your way out. It's a solution that allows you to start over financially with a clean slate. However, filing for bankruptcy is not as easy as dropping by the courthouse and filling out some paperwork. The bankruptcy process can be quite complex and unfamiliar, especially to those who have no first-hand experience. Furthermore, there is more than one type of bankruptcy and many questions to consider when deciding on how to file for bankruptcy. Worst of all, a mistake in filing can cause your case to be dismissed (and in some cases, a minimum waiting period until you may file again again). Because there is so much at stake, it's important to think about these things before you file.

What can bankruptcy do for you?
First of all, it's important to understand what bankruptcy can do for you. It's not a magic wand that can make all of your problems disappear. Your creditors won't just settle for the fact that they're not getting a penny of what you owe them. Your creditors will want to get as much as they can of what is owed them. As a result, many of your assets other than those that are exempt or those that you choose to reaffirm will be taken and sold in order to repay as much of your debts as possible. That said, bankruptcy can eliminate all unsecured debt such as back rent, unpaid utility bills, consumer debt, and medical bills (to name a few). Bankruptcy will not eliminate secured debts such as court-ordered child support, alimony, back taxes, or student loans. You will have to continue paying on these even after bankruptcy.

What's expected of you?
Because bankruptcy is a serious decision with long term consequences that affect you and your creditors, the court wants to make sure that the decision isn't reached lightly. As a result, there are some hoops to jump through. A person filing for bankruptcy must take an income test and a means test to make sure they qualify to file for bankruptcy. Furthermore, you'll be required to take credit counseling.

Chapter 13 bankruptcy
When most people think about bankruptcy, they're thinking of Chapter 7 bankruptcy because it is the most common and straight forward. However, there is another option for individuals seeking financial relief. In a Chapter 13 bankruptcy, a person can reorganize their finances by coming up with a debt repayment plan that is approved by the court. This is a good option for individuals who make too much or who don't want to part with many of their assets.

Bankruptcy consultation
Because the bankruptcy process can be difficult for most people, and because there are so many things to consider, it's recommended that you seek legal help. Most reputable bankruptcy attorney's offer a free consultation in which you sit down together and examine your circumstances to determine the best course of action.

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Source: ebony.com/career-finance/the-different-degrees-of-bankruptcy-333#axzz368YQxnH1

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