Even though you’re thorough with every cent you spent and a budget-conscious individual, you may still find yourself dealing with bankruptcy. What is bankruptcy? It is a financial state in which you have more debts that you can no longer pay. If you are in such situation already, the prudent thing to do is file for bankruptcy. However, don’t expect to have the financial freedom that you usually enjoy. Still, there are things that you can do to live through bankruptcy.
Limitations of Bankruptcy
As mentioned a while ago, bankruptcy hinders your financial freedom. It is also a known fact that it is more time-consuming and tedious to file for bankruptcy. You need to request lenders and financial institutions to acknowledge your plea.
Understand that you still need to settle your earlier debts and filing for bankruptcy does not mean you are exempted from your obligations. You will eventually lose your car or house in the process when you filed for bankruptcy. Having a bankruptcy plea in your hand is not enough to exempt you from paying your states-protected financial charges and obligations, child support, student loans, or alimony.
A bankruptcy plea can only help clear your unsecured debts, which include unsecured loans and credit card payments. You must understand the limitations of bankruptcy so you can seek other options that can help you settle your secured loans and debts.
About Time to Secure Help
Before you opt to file for bankruptcy, it is wise to do extensive research first regarding the available options that you can choose from. You need to choose the options with lesser setbacks. Liquidating your investments when facing bankruptcy may not be a sound decision. You need to gather all the necessary documents that you will need when filing for bankruptcy. This can create ease in processing. It is also foolish to have a savings account in banks where you have a loan. These banks will immediately seize your deposits in their banks when your account turns delinquent.
Attending the credit counseling sessions is a must when you have decided to get a bankruptcy plea. You will learn a broader perspective regarding the requirements of getting a bankruptcy plea. You will also learn valuable skills in managing your debt. You also need to hire a good financial lawyer who will handle the process.
Chapters on Bankruptcy
You can file for bankruptcy under Chapter 7 or 13. However, you don’t have a say in choosing the Chapter. Because of this, having a financial lawyer is a must. He or she can explain to you about the Chapter where your bankruptcy plea was filed and other things that you want to know.
Chapter 7 is about pure bankruptcy, which is nearly impossible to happen. Your financial institution or lender has the right to sell all your non-exempt assets to pay off some of your unsecured debts. The rest of the debt is pardoned. Under this Chapter, your car, retirement accounts, and house are safe from being taken as long as payments have been settled. However, Chapter 7 has been tightened because of the credit firms’ aggressive lending.
Chapter 13, which most courts favor, deals with a repayment plan. Under this Chapter, you are required to pay as much as you can afford. The remaining debt is forgiven after three to five years of paying it. Depending on your commitment and willingness to pay your standing debts, most of your assets will remain in your possession.
Living through Bankruptcy
You can stop debt collection agencies from calling you every now and then when you file for bankruptcy. You must attend the credit counseling sessions to gather the information about your bankruptcy plea. Once the process has been completed, there will be a repayment plan. The bankruptcy will remain in your record for at least ten years.