Bankruptcy, like any other legal process, can be a lengthy and challenging affair. Before you file for any type of bankruptcy though, there are certain things that you need to be aware of. If you’re considering filing for bankruptcy, keep reading. Here are the most important facts you should know about the process.
There Are Multiple Types of Bankruptcy
That’s right, there are multiple kinds of bankruptcy, and you need to know which form will work best for you. Chapter 7 bankruptcy is also known as liquidation or straight bankruptcy. This allows people to essentially discharge all of their debts and start with a blank slate. But if you’re facing debt issues and simply want to reorganize, chapter 13 bankruptcy cases are going to be better for you. This does not liquidate your assets. Instead, this allows you to reorganize the way you’re paying back your creditors.
Not Every Debt is Forgiven
One of the most common bankruptcy issues that people run into is thinking that every debt is forgiven in chapter 7. The unfortunate truth is that most student loans, mortgages, and taxes are debts that can’t be forgiven through bankruptcy. In addition, creditors can dispute the discharge of debt. If the court sides with them, then you’ll still owe the money.
Income Makes a Difference
Whether you work in criminal justice or in international investigations, your income matters when it comes to bankruptcy. Anybody can file for bankruptcy, but you may not be eligible for chapter 7 based on your income. In that case, you’ll need to file for chapter 13 and your income will play a role in how your debt is restructured.
Bankruptcy Isn’t Free
Bankruptcy is a lengthy legal process, which means you’ll need to hire a lawyer to help you. And while bankruptcy may eliminate the majority of your debt, your lawyer fees will not disappear once the process is complete. In addition, fees for filing chapter 13 are generally higher because the process is lengthier. This is another one of many common bankruptcy issues that people run into when filing.
If you’re considering bankruptcy, don’t forget about these key facts!