Consumers who are considering filing bankruptcy are faced with a lot of questions and are often not sure what the advantages could be- if any. Besides the obvious advantage of not having the debt that hangs over their head everyday, are their any other advantages of potentially damaging your credit report for 7 to 10 years by filing bankruptcy?
There are many different aspects to consider before making a final decision. There are always options, but choosing the right option is not always easy. Below are some of the advantages that can help the consumer make thought-consuming decisions that are right for them. The advantages are not always the deciding factor but they can sure help you make a wise decision.
The Automatic Stay
One advantage is when the consumer files for Chapter 7 or Chapter 13 bankruptcy, a petition is filed and there is what is called an automatic stay, which requires the creditors by law to cease all activities of collecting the debt. This means that they have to stop calling, leaving messages, or mailing you notices when they are notified of your intentions. Creditors can be penalized by the court system if their efforts continue. This type of situation is best handled by an attorney. Bankruptcy Attorneys are available for a free consultation to answer any and all questions that you may have. They will help you see the advantages that can be offered by Chapter 7 and Chapter 13 bankruptcy. Each type of bankruptcy has it’s own set of advantages and disadvantages.
A Fresh Start
The advantage of obtaining a fresh financial start is another major benefit that a consumer should consider when deciding if filing a Chapter 7 is the best choice for them. Chapter 7 bankruptcy is a better option for debtors who have little or no property and mostly unsecured debts. You can choose what debts you wish to file Chapter 7 bankruptcy. This includes both secured and unsecured debts. Unsecured debts are those like medical bills and credit cards. A secured debt is when you have decided to use collateral that can include your home, car, or other major assets you have ownership of. Chapter 7 bankruptcy is also referred to as liquidation.
Chapter 7 is not a perfect solution, however, as there are some unsecured debts that do not qualify for Chapter 7 bankruptcy- including most school loans. Please ask questions of your bankruptcy lawyers. Consumers who are eligible for Chapter 7 bankruptcy may be discharged or forgiven from most unsecured debts. With a secured debt the creditor is entitled to collect the debt by seizing and selling certain assets of the debtor if payments are missed.
Chapter 13 bankruptcy provides a better solution for those consumers who have a regular income, secured debts and do not which to loose their property. Chapter 13 bankruptcy allows the consumer to submit a plan, to the bankruptcy court to repay the debts that are secured in a three to five year period of time. This means the consumer does not have to lose ownership of the items used to secure the debt. Each individual’s situation is different though, and must be evaluated before deciding which type of bankruptcy is right for their particular situation.
When a consumer decides to file for bankruptcy, whether it is Chapter 7 or Chapter 13, the consumer is required to take some classes. The consumer is required to attend classes pertaining to credit counseling and debtor education. This is an advantage that not only helps you figure what had went wrong, but it will also help you find new ways of budgeting, paying bills, and spending your funds so that you do not run into the same financial difficulty in the future. The classes also teach you how to protect yourself against identity theft and also how to read and monitor your credit report.
Employment After Bankruptcy
Consumers that are concerned about being dismissed from a job due to the fact that they are filing bankruptcy should not be worried. Another advantage is that employers are not allowed to dismiss an employee based upon the fact that they, the employee, are filing bankruptcy. Keep in mind, however, that it may affect your ability to obtain new employment for a few years after filing bankruptcy.
Deciding to file for bankruptcy is never an easy choice to make. You must first weigh the pros and cons, and determine what type of bankruptcy you can file.
There are two major ways to file bankruptcy and you should know that it is not an easy process. You can do it on your own if you understand the laws and the two different types of bankruptcy you can file. First there is chapter 7; chapter 7 bankruptcy is the conversion of assets into money. This allows you to payoff debts quickly. With chapter 7 bankruptcy you sell your assets to pay your creditors and within a few months you have charge offs on your credit. Chapter 13 is the next method used to file bankruptcy in the United States. Chapter 13 is the repayment plan with little or no interest. This means that you file chapter 13 with the courts, then all of your debts are compiled and you are set up on a repayment of those debts to take place each month until it is paid off. This is the advised way to go if you have a steady job but just cannot make all your monthly payments.
When considering both of these options you may be overwhelmed by what is best for you and your situation. The best advice is to seek out legal council that can assist you in determining which type of bankruptcy you should file as well as help you with filing the papers with the courts.
When it comes to choosing an attorney to represent you in your bankruptcy case you want to ask some important questions to aid you in your decision. Do not consider fees and payment prices alone, as you should focus on other factors that are just as important if not more important.
Important Questions To Ask
Ask each attorney you speak with how long they have been in practice and what level is their experience as an attorney. Ask for the attorney’s qualifications and what areas they specialize in. Asking about fees and payments is also needed for your choice in choosing your bankruptcy attorney. Also ask yourself some questions. Questions such as does the attorney seem competent? Is his office staff organized and punctual? If you are able ask some questions about the attorneys client relationships. Law does prohibit an attorney from speaking about clients unless he has been given the permission from the client. These questions can allow you to make a solid choice on who will represent you.
Comfort And Confidence
When meeting with your attorney does he or she seem to be considerate of your concerns? Do you feel comfortable speaking to your attorney about all aspects of your bankruptcy decision? Do you personally feel confident that your attorney will be able to perform all his or her duties in your bankruptcy case? If you feel discomfort of any kind you may want to continue reviewing possible attorneys for your case. You have to feel safe enough to put your financial concerns in the hands of your attorney. This will allow the process of bankruptcy to be much less uncomfortable and to proceed much more fluidly for a positive experience.