When you are under a mountain of debt, filing for bankruptcy may be the only viable option, as it can allow you a fresh new start in your financial life. However, it doesn’t hurt to have a little bit more know-how about bankruptcy before you considering filing for it.
1. Two main types of Bankruptcy
For consumers, the two main types of bankruptcy they can file under are Chapters 7 and 13. The first option allows you to discharge your debt by liquidating your non-exempt assets, while the second will enable you to reschedule your debt repayment plan. For more information, be sure to check out this blog.
2. Your Location Matters
Bankruptcy laws can vary from state to state. This is why it is crucial to do research on your local state laws or consult an attorney before filing for bankruptcy.
3. It’s Not Free!
On average, the cost of filing for bankruptcy can range from $1500 to $3000 on average. First, there are the necessary filing fee and court fees you have to pay. Second is the cost of hiring an attorney. Sure, you can file for bankruptcy without a lawyer, but your chances of succeeding can be very low.
Nonetheless, these costs are often well worth it as bankruptcy helps you escape the even costlier dilemma of high debt burden.
4. It Doesn’t Always Make Your Credit Score Worse
If you are falling behind with repayments, and are heavily indebted, filing for bankruptcy probably won’t make a significant dent on your already worse credit score. In the long run, you may even see your credit score improve after bankruptcy. You may even qualify for an FHA loan a year or two after you filed for bankruptcy.
5. Bankruptcy is Public
Your filed bankruptcy is held in public records; this means that anyone can potentially seek it out if they are interested. Fortunately, unless you are really famous, few people would be aware of your case. The only people who would likely be searching it up would be individuals and organizations doing background checks on you, e.g. your employer, security personals, and creditors.
6. You have to Attend Classes
Before you file for bankruptcy, you are required to attend a 60 to 80-minute pre-bankruptcy counseling session within 180 days before the filing date. After your bankruptcy is officially concluded, you will need to attend another 120-minute credit counseling session. Fortunately, you are given the option to attend the class online or through the phone if you can’t do so in person.
Before filing for bankruptcy, consulting with a legal attorney is always recommended. They are in a position to best guide you on how to proceed with the bankruptcy process with minimal losses.
If you require a professional, personalized legal service, consider The Law Offices Sean T. Flynn. To schedule your free consultation, call 512.640.3340, or contact directly online.