Filing bankruptcy should be your last resort to trying to get out of debt. If you have found yourself in this situation then you should try to avoid the pitfalls that come with filling for bankruptcy.
If you have found yourself struggling to make payment on your loans or mortgages and your are completely extended beyond your credit limit, collection agencies have become uncooperative and you find yourself needing more than a credit councilor, then you may need to file a chapter 7 or chapter 13 bankruptcy.
The first thing that you should do is to seek the advice of an attorney that specialized in bankruptcy, they will be able to tell you which chapter you should file. The attorney will go through your financial records to see which one best suits your situation.
The attorney is the best person who should look into this as it is their department because attorney bankruptcy is something that you come across with everyday as there are numerous cases where someone falls into debt and goes from pillar to post to repay it from his creditors but only a few are successful in repaying it as a result of which you can see the san diego bankruptcy attorney always on the job and handling cases with an iron fist and if your financial records are not in order, you may very well face legal consequences as your credit history is in jeopardy.
The two different types of bankruptcy are chapter 7 and chapter 13. Chapter 7 gets rid of all debt except for maybe alimony and maybe even some taxes, while Chapter 13 allows people with a steady income to prolong their bills over a 36 – 60 month period.
Here is how they work and how they help you. When you file a chapter 7 or a chapter 13 bankruptcy, you are issued a restraining order by the courts to protect you from all creditors. This will help against creditors garnishing your wages, harassment, and foreclosure without some type of a court order. This can come in handy to relieve you from the stress that comes with having to lose your personal property.
Now that we a little bit about each one of these, I am going to go into more detail on each one of them.
When you have unsecured debt, you may need to file a Chapter 7. This is for people who have items that they are still paying on such as furniture or appliances. You can return these without it costing you anything or you may chose to keep these items by being allowed a reaffirmation agreement with the creditors. When you file a Chapter 7, the attorney fees are set up so that you can establish some type of installment plan with them.
Make sure that you know the law behind filing for a Chapter 7 bankruptcy. In year 2001, the Congress passed a new bankruptcy law that makes it harder for anyone to file a Chapter 7 to wipe out all of their debt. When you file for a Chapter 7, you must first undergo credit counseling and take what is known as a means test which is where a judge makes the decision on whether or not you are able to make a twenty-five percent payment to their debt each pay period. If you are able to do this then you must file a Chapter 13 instead.
A Chapter 13 is much different from the Chapter 7. A Chapter 13 allows you to get immediate relief from creditors by allowing you to pay off the debt over an extended period of time, instead of just letting them go like you would in a Chapter 7. The attorney fees for filing a Chapter 13 will also be added to the total amount of debt and are paid through the court trustee.
Whichever bankruptcy that you file, remember that you will be left with a black mark on your credit history for filing. The up side to filing for bankruptcy is that you gain immediate relief, especially if you file a Chapter 7.