Bankruptcy is a very delicate subject for most people. It’s senseless for anyone to feel ashamed to file for chapter 7 or chapter 13 bankruptcy when most of us have also made bad choices at one time or another.
Everyone deserves a 2nd chance in life and filing bankruptcy can offer you exactly that.
Bankruptcy is a legal status for a person or business that can’t pay off unsettled debt. This is something that 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 wipe out “most of” or “all of” their debts.
Here are some reason why someone would file for bankruptcy.
1. Stop Foreclosure
2. Prevent Repossession of an Automobile
3. Lower debt
4. Eliminate debt
5. Stop wage garnishment
Before you file get prepared
I’m going to give you some good advice and what you’ll do with it is totally up to you. Before you file, you’ll most likely have to obtain credit counseling within 180 days. You’ll need to receive the credit counseling from an “approved provider” listed on the US courts website.
You’ll need to talk to a lawyer who will help you file and walk you through the entire process. Filing can cost $700-$2500 or even more depending on where you file. Most of the time, your attorney will have information about the 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 you file.
Chapter 13 Bankruptcies- You might be able to land a conventional loan two years after a Chapter 13 discharge. FHA and VA loans are even more tolerant.
Chapter 7 Bankruptcies- you’re typically looking at a four-year wait for conventional loans and a two-year wait for either FHA or VA financing.
Auto mobile financing is pretty simple to obtain these days but your IR will be very high and your payment won’t be pretty either.
What types of bankruptcies are available?
Most of the time you will only hear of chapter 7 and chapter 13 bankruptcy. Although chapter 7 and chapter 13 are some options available there are four other options as well.
Chapter 9: Chapter 9 may only be applied to municipalities such as cities or towns and allows for their reorganization. This is most likely something you will never hear of 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 may be used by individuals as well. If you own a business, you might want to consider filing a chapter 11.
Chapter 12: Chapter 12 is used exclusively to adjust the debts of a family farmer or family fisherman.
Chapter 15: Chapter 15 applies to cross-border cases, in which the debtor has assets and debts both in the United States and elsewhere.
I hope this article gave you some understanding of the options that you have and also helps you find the right attorney to help you with your filing.