The decision to file for bankruptcy is not an easy one to make. Of course, deciding to file for bankruptcy will have a large impact on your financial future, and the choices you make when filing for bankruptcy impact how quickly you will be able to re-establish yourself financially. Before you file, firmly understand bankruptcy options and their consequences.
What is Bankruptcy?
Bankruptcy is meant to assist those in financial straits by allowing them to have their debts forgiven. Once an individual has declared bankruptcy, he or she has a fresh start and is able to rebuild a financial future without being plagued with pre-existing debts.
Types of Bankruptcy
Those considering filing for bankruptcy are usually left with a choice between two types: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Either Chapter 7 or Chapter 13 bankruptcy could be the best choice for any given consumer depending on the situation. In general, it is better to file Chapter 7 bankruptcy for individuals who do not have enough income coming in and who have extensive unsecured debt that they are unable to repay.
Homeowners who are considering bankruptcy might be better off filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy is usually the best option for those who still have significant income coming in. It can allow for more negotiation, often permitting homeowners to stay away from foreclosure and keep their homes.
Advantages and Disadvantages
Upon filing for bankruptcy, consumers often experience an initial feeling of relief. Most creditors can no longer call to collect money on debts. This is a huge benefit for those who have long been plagued by the stress of being hounded by creditors. However, it’s important to understand that a bankruptcy filing might not exonerate a consumer from all debts. Debts from student loans, alimony, taxes, or mortgages will still be applicable. Of course, the major disadvantage of a bankruptcy filing is the consequences it has on one’s credit score.
Filing for bankruptcy is a complicated process that is best carried out with the help of a legal professional who is specialized in bankruptcy procedures. The best bankruptcy law firms, like W M Law (formerly Wagoner Maxcy Westbrook) with bankruptcy lawyers in Kansas City, will provide free consultations and have extensive experiences filing for past bankruptcies that have extracted clients from difficult financial situations.
A bankruptcy filing is often the best solution when debt has gotten out of control. Thoroughly researching one’s options and acquiring advice from knowledgeable authorities on the process help consumers to make the best possible decisions on bankruptcy filing.