As debts pile up, one might be tempted to file for bankruptcy. It is a feeling that might leave an individual feeling scared and hopeless. However, there are some options before it gets there. While doing the filing could help one start over, it is one decision that must not be taken lightly. This is because there are serious consequences that it comes with. When considering bankruptcy CA residents need to know some information about it.
There is more than one type that one can opt for. Each of the types has its restrictions and outcomes that are different. Chapter 7 bankruptcy is also called liquidation. When one files for this, they will allow debtors to discharge most of their debts. It requires a debtor to liquidate or sell most assets so as to pay what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
The types of debts which are not discharged include child support, student loans, real estate liens and majority of taxes. There is also possibility that a debtor might oppose discharge of their debts. If this is allowed, then the debtor will still owe the money. The income of a person is very critical when it comes to filing for bankruptcy.
While all people can file that they are bankrupt, income could disqualify one or affect what they can file for. For instance, some people cannot file for chapter 7 owing to what they earn. For people who file for chapter 13, their income will influence and determine how debt restructuring is done. It is also not free to file. One will need to hire an attorney to oversee the process, further adding to the costs. The fees of attorneys might be added to the bankruptcy filing. Chapter 13 filing is costlier since the process takes much longer.
Bankruptcy destroys credit. Payment history will determine 35 percent of credit score. Deciding to file that one is bankrupt will have long lasting effects on ability to secure loans or utilize credit. Bankruptcies stay on credit for as long as 10 years. During the period, getting credit cards or landing some jobs will be hard. The filing also becomes public record.
Filing that one is bankrupt will not cure the root problems. While it helps to restructure debt or discharge, it will not cure problems that one had in the first place. Filing that one is bankrupt could be because of some poor financial decisions, which might still be there.
There are various options that one can go for. You could renegotiate debts with creditors or create a payoff plan. For some people, consolidation is a good option, where they consolidate high-interest debts into a loan with less interest.
There is more than one type that one can opt for. Each of the types has its restrictions and outcomes that are different. Chapter 7 bankruptcy is also called liquidation. When one files for this, they will allow debtors to discharge most of their debts. It requires a debtor to liquidate or sell most assets so as to pay what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
The types of debts which are not discharged include child support, student loans, real estate liens and majority of taxes. There is also possibility that a debtor might oppose discharge of their debts. If this is allowed, then the debtor will still owe the money. The income of a person is very critical when it comes to filing for bankruptcy.
While all people can file that they are bankrupt, income could disqualify one or affect what they can file for. For instance, some people cannot file for chapter 7 owing to what they earn. For people who file for chapter 13, their income will influence and determine how debt restructuring is done. It is also not free to file. One will need to hire an attorney to oversee the process, further adding to the costs. The fees of attorneys might be added to the bankruptcy filing. Chapter 13 filing is costlier since the process takes much longer.
Bankruptcy destroys credit. Payment history will determine 35 percent of credit score. Deciding to file that one is bankrupt will have long lasting effects on ability to secure loans or utilize credit. Bankruptcies stay on credit for as long as 10 years. During the period, getting credit cards or landing some jobs will be hard. The filing also becomes public record.
Filing that one is bankrupt will not cure the root problems. While it helps to restructure debt or discharge, it will not cure problems that one had in the first place. Filing that one is bankrupt could be because of some poor financial decisions, which might still be there.
There are various options that one can go for. You could renegotiate debts with creditors or create a payoff plan. For some people, consolidation is a good option, where they consolidate high-interest debts into a loan with less interest.
About the Author:
You can get great tips for selecting a bankruptcy CA lawyer and more information about a well-respected attorney at http://www.centralcoastbankruptcy.com now.
No comments:
Post a Comment