What To Consider When Filing For Bankruptcy
Foreclosures are the biggest reason that most people choose Chapter 13 bankruptcy rather than the more attractive Chapter 7. With Chapter 13, homeowners who face foreclosure proceedings can halt the legal actions by choosing this bankruptcy option.
What happens when individuals are enveloped in debt? What happens when the money woes one has stack up and compresses them? What is the next step towards a future for them and their families? Bankruptcy can be an option for people who feel they have nowhere to turn. Bankruptcy can hinder your credit report for the next ten years but is an option in debt relief when there is nowhere else to turn.
And what of the true costs of the respective options? What are the consequences? Well, whether debts are cleared through bankruptcy or debt settlement, there are certain fees to be paid. However, the real consequence is the effect either can have on your credit report.
Keeping the home in a Chapter 13 bankruptcy may not be the best solution for everyone. If your mortgage payments are too high or you're upside-down in your home loan, then you might be better off moving somewhere more affordable. On the other hand, if making the mortgage payments is within your means but you just fell behind, then a Chapter 13 might be the only way to save your home.
If you file for bankruptcy, you are going to be able to start again because most of your debts will have been canceled. Of course, anything you have of any value will have been sold, so you are going to have to start over with regards to that as well. Another disadvantage is that you are going to have a record of the bankruptcy on your credit report for 10 years. It may mean that you aren't in a position to get loans or other types of credit, but this effect could happen just as easily with high debts.
Before the new law, consultations with an attorney would allow the client to choose what type of bankruptcy they felt suited them best. However, the new law is framed to reduce the number of Chapter 7 filings by only allowing people who fall under their median state income, adjusted for family size and inflation, and people who meet rigorous standards under the means test to file for it. The rest of the people who don't meet these standards must be evaluated by a series of complex, mathematical formulas that change annually to match new median incomes and expense standards. Clients who do not qualify through the means test will be required to file for Chapter 13 bankruptcy. The new law also extended the Chapter 13 term from a three- to five-year term, to a mandatory five-year term. Throughout the mandatory five-year term, the client must be supervised and represented before they can receive their discharge.
You will also have to list all of your assets, which include organizations, real estate and also automobiles. All of this information will be necessary if you declare bankruptcy.