For one reason or another your debt can accumulate to a point that is unsustainable. Having creditors after you could be an unpleasant experience. They will send you letters, emails, phone calls, etc. The stress alone could would drive the average person mad.
In most situations people want to pay their bills. A lack of funds will force anyone to have to prioritize their obligations, causing some bills to be put to the side. Eventually your debt will catch up with you. One day you will go to pay for a cup of coffee only to find that your wages have been garnished. Hopefully by then you will have the money to pay back the debt that you owe. For many getting the money to pay the debt is unlikely. Things may get to the point where you will have to consider bankruptcy.
The idea of bankruptcy is taboo for many. Filing for bankruptcy is rather common and could really provide some much needed help. Some individuals and even companies file more than once. As individual chapter 7 or 13 will be your options. Filing chapter 7 will wipe out any of the debt that is included in the bankruptcy. Chapter 13 is a court ordered consolidation. Deciding on the right chapter to file will depend on a few things.
The first factor will be your income. Depending on your state there will be income threshold. If the income exceeds a specific amount, chapter 7 will not be an option. If you are making enough money, a consolidation bankruptcy will be your only option. If you are under the income limits, chapter 13 may still be a better choice. The most common situation involves a home. You may behind on payments and want to keep your house. In a chapter 7, everything that is not up to date will have to be included.
Filing for bankruptcy can be inexpensive if you choose the right attorney. Always use someone that is highly recommended or that is referred by someone who you trust. Technically you could file bankruptcy without an attorney, but it is not advisable. The petition is over 50 pages and sometimes even attorneys miss things. In most cases you will not have to appear in court more than twice. The new laws require that you take a court mandated financial course, but there are online options. The entire process will take some time. During you will not be allowed to apply for any new credit, unless the court allows. In some cases the person may need financing for items like a vehicle. Typically it is difficult to get financing while in bankruptcy because you could include it in the filing. You can file more than once, but there is a time requirement between filing.
After your case is discharged, the battle is not over. The process of rebuilding your credit will be just as hard. In most cases, it is a good idea to hire a credit advising company. For a fee, they will help remove negative trade-lines from the credit. Items that were included in the filing are likely to remain on the credit for some time. There are three credit bureaus often with considerable variations between the them. Removing the items yourself is not difficult, but can take a lot of work. In some cases it is better to get them removed yourself. If you have the money, hire a professional.
Bankruptcy can be scary experience. A lack knowledge and information will make it worse. Feeling like your stuck without a solution can be heart wrenching. Filing could give you the relief and hope that you need.
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