If you are struggling with crippling debt and find it difficult to make
your monthly payments, then you may benefit from declaring bankruptcy.
Many people don’t realize the immense benefit this could have on
their financial standing due to both the perceived stigma against it and
simply not knowing what exactly bankruptcy is. Let’s take a closer
look at the basics of declaring bankruptcy and discuss when and how it
could help you if you are struggling to get by and desperately need financial relief.
Types of Bankruptcy
There are several different types of bankruptcy, and which one you file
depends on your situation, including your income levels, type of debt,
and whether you are filing for yourself or your business. The two most
common types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is what is known as a “liquidation” type
of bankruptcy. Filing for Chapter 7 immediately ceases all collection
efforts against you from banks and creditors, but in exchange allows them
to seize and sell off some of your assets to attempt to repay some of
your outstanding debt. This is what makes many people think that they
will lose their house if they declare bankruptcy, but it’s usually
possible to protect things like your home and car in this process, while
still wiping away some of your outstanding debt.
Chapter 13 is a “reorganization” type of bankruptcy, known
as “wage earner” bankruptcy. By filing for Chapter 13, you
essentially agree to work with your creditors to come up with a repayment
plan and then stick to it for the course of three to five years in order
to absolve yourself of your debts. This may allow you to repay any secured
debt you may have without having the property securing that debt be repossessed,
but it’s a little trickier to qualify to file this type of bankruptcy.
It’s important to remember that no type of bankruptcy allows you
to simply skip out on your debt without paying anything: if you acquire
the debt, you will have to pay it off in some form, even if you have some
of it forgiven.
Consequences of Declaring Bankruptcy
Bankruptcy does not come without consequences, however. Declaring bankruptcy
may give you time in which to reorganize and settle some of your debts,
but it will stay with you on your credit record for up to seven years.
This means that you will have a lot more trouble applying for things like
lines of credit, home loans, or even apartment rentals for a while after
However, for many people, the benefits outweigh the costs. If you are struggling
with debt and being harassed by bill collectors, declaring bankruptcy
can put a stop to any collection actions against you, and give you time
to reorganize and start paying off your debts on terms that are friendlier
to you. If you stick with your payment plans work to eliminate your debts
quickly, many people often see a dramatic improvement in their credit
scores within just a few short years, even with the bankruptcy declaration
on their record.
Before filing bankruptcy or beginning the process, you should consult with
an experienced Kent County bankruptcy attorney to find out if declaring
is right for you. At the
Law Office of Steven J. Hart, we strive to help people get their financial independence back while
keeping their possessions that matter the most. Attorney Hart and his
team are dedicated to providing the highest standards of professional
legal counsel in order to put the law on your side and help you through
your most difficult financial times.
free initial consultation, call the Law Office of Steven J. Hart today at 888.701.0919.