If you are overwhelmed by debt, you’re probably dealing with tons of stress, and you might be wondering about whether bankruptcy is the best option. Before you make a decision, it helps to know a little about what you’re getting into.
Bankruptcy can take time.
You’re probably ready for a fresh start, but you should know that it can take some time. The most common form of bankruptcy, Chapter 7, takes an average of four months while others can take two years or longer. Whatever course your attorney advises, you need to be prepared to stick to it and be patient.
You’ll probably have to go to court.
Before your claim is processed, you most likely have to go to a court hearing called, “meeting of creditors.” This is usually fairly simple and involves answering a few simple questions. Creditors can also attend and ask you questions.
Transparency is important.
Honesty is the best policy when it comes to filing for bankruptcy. Only those who are truthful are allowed a complete discharge of debt. You have to list all of your property, debts, and creditors. If you fail to do this, you might lose your case and face serious federal charges.
There are different types of bankruptcy.
There are four types of bankruptcy: Chapter 7, Chapter 11, Chapter 12, and Chapter 13. Most file Chapter 7 which requires liquidation of your assets to pay the debt. Often times you are allowed to keep some property like you house and car. Chapter 11 is usually for business, Chapter 12 is for family farmers, and Chapter 13 is a debt adjustment. Your attorney can help you better understand your options and determine which is best for you.
Bankruptcy stays on your credit for 10 years.
If you have unpaid debt, your credit probably isn’t so great anyway, but it’s still a good idea to know what will happen after bankruptcy. Bankruptcy stays on your credit report for 10 years, but that doesn’t always keep you from getting credit during that period, but will probably result in higher interest rates.
These are just some of the many details about filing for bankruptcy. Bankruptcy can be like a life jacket for those drowning in debt, but it isn’t for everyone. Talk to your attorney to learn whether bankruptcy is right for you.