Declaring bankruptcy is an enticing option if you’re looking for a way out from under your crushing debt. If you’re falling behind on some hefty payments – or those payments are just too many to keep track of – declaring bankruptcy is a way out. But do you fully understand the consequences?
As a bankruptcy lawyer like our friends at the Law Offices of Neil Crane can explain, bankruptcy isn’t as easy as many people think. Declaring bankruptcy is usually the tip of the iceberg, the beginning of a very long road to financial recovery and stability. And like most roads, there are plenty of twists and turns along the way.
When you declare bankruptcy, you’re setting yourself up for a fresh financial start, but you’ll also have to deal with severely damaged credit for many years to come – in some cases as long as ten years. Additionally, you can expect much more difficulty when you need to apply for housing, loans, or employment.
Bankruptcy stays on your record and makes a huge impact on your life, so it’s important to ask yourself a few important questions before you decide to declare bankruptcy in the first place. Read on to learn more about bankruptcy, and see how the right lawyers can help you make an informed decision.
When you’re considering declaring personal bankruptcy, Chapter 7 bankruptcy is one of your major options. When you declare Chapter 7 bankruptcy, you sell off most (or all) of your valid assets in order to pay off your creditors. It’s a drastic step, but the blank slate Chapter 7 offers is a major motivator for those interested in declaring bankruptcy.
The downside is how much you’ll have to part with. Those assets will need to be liquidated in order to pay off your debts, and while there is a list of protected assets, most of your hard work will go up in smoke. Expect to sell off second properties, collections, and even family heirlooms so you can finally get out from under that debt.
If you’re not willing to liquidate your assets, it’s perfectly understandable. Fortunately, there’s another option available for you. Chapter 13 bankruptcy is also known as reorganization bankruptcy, and unlike Chapter 7 you shouldn’t have to sell off the family silverware to satisfy your creditors. Instead, when you file Chapter 13 bankruptcy, you have to stick to a court-mandated repayment plan.
You may not have to liquidate assets, but you’ll have to make regular payments to your creditors over the course of several months or years, depending on how severe your debt may be. You’ll be able to hold on to your assets, but you’ll have regular payments hanging over your head for as long as it takes to satisfy your creditors.
When you declare bankruptcy, you shouldn’t do it alone. Fortunately, legal professionals can walk you through your financial challenges. The right bankruptcy lawyer can help you decide which path to take when it’s time to declare bankruptcy, and they can help you navigate the ins and outs of declaring bankruptcy when you decide on whether you want to declare Chapter 7 or Chapter 13 bankruptcy.
It’s never too late to reach out to a bankruptcy lawyer. Get in touch with a bankruptcy specialist and get started on your path to financial freedom.