3 Things you need to know about bankruptcy

If you have been struggling paying your debts, got no other source of income to pay off them within a reasonable time, then you might consider the idea of filing for bankruptcy. Before, you do you need to know basic things about it. Read on.

1. What is Bankruptcy?

Bankruptcy is a type of insolvency wherein a person have himself declared as bankrupt by the court. There are two types of bankruptcy under the law. There is the Chapter 7. This one a person will have his debts all wiped out without even repaying all his creditors. However, it depends on where the person resides, he may or not lose his home in the process. As for Chapter 13, you need to repay your debtors within 3 to 5 years of time. You will not lose your home in the process.

If you opt to file bankruptcy under Chapter 13 make sure you are diligent enough to pay your debts. One single default would lead to the court to intervene and have all your assets be liquidated the soonest. Be sure you do pick one carefully.

2. Am I qualified to file for bankruptcy?

If you are not able to pay all your debts, no means of paying your debts, no assets to sell and have the proceeds go to your creditors, and your financial situation seem to improve in the future, then you can file for bankruptcy.

3. What happens next after the court declared me as bankrupt?

After the court declared you bankrupt, then the next thing you need to do is to plan a course of action on how to pay off your creditors if you file under Chapter 13. However, if you go for Chapter 7, then you need to be aware that there is a greater possibility you might lose your home. Also, it has an effect on your credit score, credit standing for over the next ten years. This is the reason why filing for bankruptcy will serve as a last resort not the number one solution in order to get out of debt.

You are the one responsible as to why you are in your current financial situation right now. You take responsibility. Take immediate action as to how you are going to go about your finances knowing that you are on the brink of losing everything that you have established with. There is no shortcuts in eliminating your debts. However, there are legal remedies of which you can avail of so that you can start off fresh. Do seek the advice of a lawyer before you consider the idea of filing for bankruptcy. In this way, you will be able to have a sound decision as to what action you would take.

It is very important to get a lawyer and have someone who is going to represent you legally in court and who is going to be there for you before, during and after the case has been filed. Remember, the future of your financial situation depends on the outcome. There are some more details about bankruptcy that you can find in this wiki.

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