How to Choose the Right Bankruptcy Options for You
Filing for bankruptcy can be a difficult decision, but it might be the best option for you. This article will help you to understand the different types of bankruptcy and make the right choice for your unique situation. If you’re considering filing for bankruptcy, talk to a bankruptcy attorney to learn more about your bankruptcy options.
There are two common types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also called liquidation bankruptcy, involves selling your assets to pay off your debts. Chapter 13 bankruptcy, also called reorganization bankruptcy, allows you to keep your assets but requires you to make payments over time.
Chapter 7 bankruptcy is typically the best option if you have a lot of debt and few assets. If you qualify for Chapter 7 bankruptcy, you may be able to get rid of most or all of your debt. However, you will likely lose some of your assets, such as your home or car.
Chapter 13 bankruptcy is typically the best option if you have a regular income and some assets that you want to keep. With Chapter 13 bankruptcy, you can create a repayment plan to make payments on your debt over time. If you make all of your payments, you may be able to keep your assets.
Before you decide to file for bankruptcy, it’s important to talk to a bankruptcy attorney. An attorney can help you understand the different types of bankruptcy and how they may affect you.
The process of filing for bankruptcy can be lengthy and complicated. Here are the steps you need to take to file for bankruptcy:
- Gather all of your financial documents. This includes your income tax returns, bank statements, and credit card bills.
- Meet with a bankruptcy attorney. An attorney can help you understand the different types of bankruptcy options and how they may affect you.
- Complete a bankruptcy petition. This document tells the court about your debts and assets.
- File the bankruptcy petition and related documents with the court.
- Go to a meeting with the trustee assigned to your case. The trustee will ask you questions about your finances and debts.
After you file for bankruptcy, the court will appoint a trustee who will manage your case. The trustee will review your financial situation and make recommendations to the court how to best repay your debts. In most cases, the trustee will recommend that you liquidate your assets and use the proceeds to pay back your creditors. However, in some cases you may be able to keep some of your assets, depending on your income and debt level.
The court will also issue an order called the “automatic stay” which prohibits your creditors from taking any action against you. This includes harassing you, seizing your assets, or filing lawsuits against you. The stay remains in effect until the court discharges your debts, which typically happens within four to six months.
Once your debts are discharged, you are no longer legally obligated to repay them. However, this doesn’t mean that your credit score will automatically improve. You may still have a difficult time obtaining credit and you may be required to pay back some or all of your discharged debts through a repayment plan or settlement agreement.