Should You File for Bankruptcy?

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If you find yourself stuck in a financial rut and it doesn’t feel like you are ever going to be able to escape, speak with a local bankruptcy lawyer to help clear things up for you. Especially when it comes to which options are best for your situation. Filing for bankruptcy is a complex matter, and there are several factors that need to be considered before going ahead with it. For some, the bailout can provide the relief necessary to move forward and regain control. For others, it can create a dismal outlook of the future. How can you know whether to keep your debt or take the government’s help? Only a lawyer skilled in rebuilding lives can give you the information that you need.

Things to Consider

There are several things to consider when thinking about filing for bankruptcy, and they all come down to one big question: “Is it worth it?” Contrary to popular belief, filing for bankruptcy is not a get-out-of-jail-free card. While the laws that make up the bankruptcy system are designed to help, they come at a price that many are not aware of. There are two common types of bankruptcy. Chapter 7 and Chapter 13 can both do wonders in alleviating pressure from debt. But as they work differently, the one that you choose depends on your specific needs, the type of debt you have, and whether you want to pay your debts over a long period of time or if you would rather sell your assets to pay your debts.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is a court-ordered liquidation of all your assets. The money goes to the creditors, and you get to move on with your life, albeit with much less stuff. If you are the type who prefers a fresh start and are not attached to things that you have collected over the years, this option is generally the fastest and easiest way to go about putting debt behind you. But, it stays on your credit report for about 10 years. Something to consider is that a Chapter 7 does not take away certain types of debt. If you owe on a house or a car, if you have taken out a student loan, or if you must pay some kind of alimony or child support, Chapter 7 bankruptcy has no effect on such debts.

Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy is completely different and is the preferred option for those who like their stuff! Granted, to benefit from Chapter 13, you need to have a decent and dependable income from which all the debts are eventually paid from. Like Chapter 7, Chapter 13 does not pay all types of debt. But, it can be a great way to get a breath of fresh air when surrounded by hungry creditors. As soon as your bankruptcy goes through, all of those who are owed money are instructed to stop calling and pursuing the money. The court system then handles a payment plan that you must adhere to.

Short-Term Impacts

The short-term impacts of filing for bankruptcy is that you get to create a new plan for your life. All calls for money stop coming in and a plan is in place to either rebuild all that was lost or repay everything that is owed. In every case, the situation leads to an opportunity to exhale and recreate. For those who understand the implications of filing bankruptcy, these feelings of relief are well worth the negative repercussions because they move you forward in a positive way. For those who take the sense of freedom to be a free pass, the situation almost always leads to more trouble down the road.

Long-Term Impacts

There are many long-term effects for filing bankruptcy. The first thing that people notice is that their credit score drops. The credit bureaus must show the bankruptcy for either seven years if it is a Chapter 13, or 10 years if it is a Chapter 7. That means everyone who checks your credit can see that you either are currently or have recently struggled with debt. This can have a serious effect on those trying to get rental agreements, a job, and borrowed money. Many people who have filed for bankruptcy report having trouble being trusted and that can lead to a decrease in a person’s overall quality of life. If a bankruptcy can be avoided, it should be.

Questions to Ask a Bankruptcy Lawyer

If there is no other option but to file for bankruptcy, there are a few questions that you should ask before getting started. How much will the entire process cost me? Lawyer fees can vary greatly, and each one provides slightly different services for the money that you pay them. While you do not want to go with the most expensive lawyer in town, it is important that you get the most out of your money. So, asking what exactly is included in the cost is important. Which type of bankruptcy is best for your current and future situation? What are the pros and cons of each? Once you learn that basic information, you need to get an idea about how much help you are going to get from the lawyer. Will they go with you to court? Will they file all your paperwork for you? The answers to these questions make it easier for you to compare different bankruptcy lawyers in a way that helps you understand why they all charge such different rates. Before filing for bankruptcy, educate yourself and hire a lawyer. You want a fresh start, not years of frustration. Which option would you choose if you had to file for bankruptcy?