Bankruptcy is a very sensitive subject for most people. It doesn't make sense that anyone should be ashamed of filing for Chapter 7 or Chapter 13 bankruptcy when most of us have also made bad choices at one point or another.
Everyone deserves a second chance at life and filing for bankruptcy can offer you just that.
Bankruptcy is a legal status for a person or business that cannot pay off unpaid debt. This is something only a state or federal court can determine.
Most people don't want to file for bankruptcy and see it as a last resort for options. Bankruptcy will allow an individual to write off "most" or "all" of their debts.
Here are a few reasons why someone would go bankrupt.
1. Stop foreclosure
2. Prevent the take-back of an automobile
3. Reduced debt
4. Eliminate debt
5. Stop wage garnishment
Before you drop off, be prepared
I will give you some great advice and what you do with it is entirely up to you. Before you apply, you will likely need to get credit counseling within 180 days. You will need to receive credit counseling from an "approved supplier" listed on the US Courts website.
You will need to speak to a lawyer who will help you file your case and guide you through the process. The deposit can cost anywhere from $ 700 to $ 2,500 or even more depending on where you deposit. Most of the time, your lawyer will have information about credit counseling programs and the list of “approved providers”.
How long will it take to recover?
In most cases, bankruptcies will stay on your credit report for 7-10 years, there are many things you could do to start improving your credit after filing.
Chapter 13 Bankruptcies – You might be able to land a conventional loan two years after a Chapter 13 release. FHA and VA loans are even more forgiving.
Chapter 7 Bankruptcies – you typically consider a four-year wait for conventional loans and a two-year wait for FHA or VA financing.
Auto mobile financing is pretty straightforward to get these days, but your IR will be very high and your payout won't look pretty either.
What types of bankruptcies are available?
Most of the time, you will only hear about Chapter 7 and 13 bankruptcy. While Chapter 7 and 13 are options available, there are four other options as well.
Chapter 9: Chapter 9 can only apply to municipalities such as towns or cities and allows their reorganization. This is probably something you will never hear from again.
Chapter 11: Chapter 11 is the third most common type of bankruptcy filing, with 1,757 filings in 2011. This chapter is almost always used to reorganize businesses, but can also be used by individuals. If you are a business owner, you may want to consider filing a Chapter 11.
Chapter 12: Chapter 12 is used exclusively to settle the debts of a family farmer or a family fisherman.
Chapter 15: Chapter 15 applies to cross-border cases, in which the debtor has assets and debts in the United States and elsewhere.
Hope this article has given you some understanding of the options you have and also helps you find the right lawyer to help you with your filing.