Anyone can go bankrupt despite being budget-conscious and careful with every cent that comes and goes out of the pocket. Bankruptcy is a financial state where you find yourself in more debts which you cannot afford to pay. In such an event, it recommended to file for bankruptcy. This however does not help you gain any financial freedom whatsoever. Let us have a view at what you need to know in order to survive bankruptcy.
To begin with, bankruptcy does not offer any financial freedom. Filing for bankruptcy has become more tedious and time-consuming. One has to request financial institutions and lenders to accept the plea.
Filing for bankruptcy does not exempt you from settling earlier debts. It therefore puts you in a position of losing your house or car. Getting a bankruptcy plea will not pardon you from the states-protected financial obligations and charges, alimony, student loans or child support.
Being granted a bankruptcy plea only clears your unsecured debts that include credit card bills and unsecured loans.
Understanding the limitations of bankruptcy is important as it enables one look for other options of settling the secured debts and loans.
Time To Seek Help.
It is advisable to do more research on available options with lesser consequences before opting to file for bankruptcy. For instance, liquidating all your investments in the event of bankruptcy would not be considered as a wise move. All the documents necessary for filing for bankruptcy need be collected and put together for ease of the process. Saving in banks that you have loans with is also not advisable. In the event that your account becomes delinquent, these banks will not hesitate to seize the deposits.
You also should attend the credit counseling sessions. During this classes, you get to see a broader perspective of what it entails to get a bankruptcy plea and also acquire valuable debt management skills. You are also required to get a good financial lawyer who will represent you throughout the process.
Bankruptcy can be filed under Chapter 13 or 7. You however are in no position to choose the Chapter. For this reason, having a financial lawyer would help in giving you the knowledge.
Pure bankruptcy – which is almost impossible – falls under Chapter 7. All non-exempt assets get sold by the lender or a financial institution in order to settle some unsecured debts. The remaining debt therein is forgiven. The financial rules in this chapter secures your house, retirement accounts and car from being taken to settle your debts as long as payments are made. This Chapter has however been tightened due to aggressive lending by the credit firms.
Most courts prefer Chapter 13 repayment plan. In this Chapter, you will pay as much as you possibly can. The debt that remains is later on forgiven. This is after three to five years. You also get to retain most of your assets depending on your willingness and commitment to repay the standing debts.
Filling for bankruptcy keeps at bay calls from debt collection agencies. You then need to attend the credit counseling sessions and get all the information surrounding your bankruptcy plea. Upon the completion of this process, a repayment plan is presented. The minimum period bankruptcy remains on your record is 10 years. It should not therefore be hurriedly rushed to.