So you’re looking at filing bankruptcy. Let
me give you a few things that you need to consider during this very serious situation.
Before you file for bankruptcy, I highly recommend that you look into speaking with a consumer
credit counseling agency. There’s two reasons for this. First off, you may not realize that
bankruptcy perhaps is not the only option. Additionally, all of the items that you prepare
in your budgeting process, and in your listing of debt that you will have to do with a consumer
credit counseling agency, is the same thing that you’ll have to do before you prepare
to have to go to an attorney to file for bankruptcy. Now you’ll need to realize that if the consumer
credit counseling service is in agreement that you’re going to need to take bankruptcy
because there’s just no other option, then they will recommend a local attorney, or maybe
several local attorney’s that you can visit to prepare for this bankruptcy proceedings.
There are two different types of personal bankruptcies, you have chapter 13 and you
have chapter 7. Chapter 13 is used more frequently than chapter 7, and rightfully so. In chapter
13 bankruptcy you will do a filing that simply protects you from the advance of your creditors,
and it will actually, sort of consolidate all of your creditors together, so that you
have a manageable monthly payment that you will make to the courts, and then they will
take those payments and pay out the creditors. You’re not actually absolving any debt in
a chapter 13 bankruptcy, what you’re doing is you’re making a planned and manageable
monthly payment to all of your creditors. Now under a chapter 7 bankruptcy, you are
absolving yourself of some debts. In the event of a chapter 7 bankruptcy, you will find that
some of your creditors will decide that they do not want to be a part of your chapter 7
bankruptcy, and you may have some unfriendly activities to take place that your lawyer
will need to know about. Now as for chapter 7 bankruptcy, this is a little bit more serious,
I guess, for lack of a better word, than a chapter 13 bankruptcy. Under chapter 13, as
we said, you’re not absolving yourself of any debt, you are instead agreeing to pay
all debt to all creditors, just at a manageable time period. Under chapter 7 it’s not that
way, you are actually absolving yourself from some debts, and then you’re choosing to pay
other debts at a more manageable rate. During a chapter 7 bankruptcy, you will be asked
to, as I said, complete filings all that include, who you owe, how much you owe, and the amount
that you’ve been paying. You’ll also have to add to this information, what security
you have for those loans, so that loans for instance, for your home, or for necessary
automobiles, or for other necessary items, that you required to have for normal living
purposes, or for business purposes, those will be included in your chapter 7 filing
in such a way that you’ll be able to retain those and make payment to those in a manageable
way. Other types of debts, such as un-secure credit card debt, or personal loans, and in
some cases medical bills, will be included in the filing in such a way that they will
be absolved or written off, and you will not be expected to make payments on those. It
is very important for you to realize that under chapter 7 bankruptcy, you only have
an opportunity to make that type of filing one time every 7 years, so it’s not to be
taken lightly. Also your attorney will advise you as to when is the appropriate time to
take a chapter 7 bankruptcy. Often times you may find that there are considerable amounts
of debt that are still incoming, such as with medical expenses, and it would not be very
wise to take a bankruptcy filing prior to the summation of all of those debts.