Financial problems thrive everywhere. You may find yourself in a pit of debt or a bad financial situation that you can’t pull yourself out of and you may now be considering filing for bankruptcy to salvage the situation.
This is not a small decision or move to make. It requires a lot of thought before going down that path. There are several questions you should ask and get answers for before filing for bankruptcy. Let’s review 5 of these questions below:
1. What Is the Source of My Financial Troubles?
Being honest with yourself regarding the real cause of your financial predicaments is arguably the most important truth you can tell yourself. If, for example, your financial problem stems from overspending or poor budgeting, filing for bankruptcy may just be a temporary solution to a never-ending problem.
Before filing for bankruptcy, taking necessary steps to change your spending and saving habits as well as steering your debt to manageable levels could be a much better option than filing for bankruptcy. Weigh what suits you better between re-negotiating your debt and discharging it through a bankruptcy application.
2. Am I Eligible to File for Bankruptcy?
The Bankruptcy Abuse Prevention and Consumer Protection Act has strict measures as to who qualifies to file for bankruptcy to settle their pending financial woes. There are several requirements that you must meet and extra fees that you must pay if you do qualify. More to this, any attorney representing you as a debtor has a higher liability and is prone to more risk.
Your attorney will need to fill out a lot of paperwork and demonstrate how your monthly income compares to your state’s median income. This data is used in the Means Test which is then used to determine whether you qualify to file for bankruptcy or not.
3. How Long Will My Credit Ranking Be Affected When I File for Bankruptcy?
In as much as filing for bankruptcy can be a great avenue for you to clean your financial slate, similarly, it can be a sure avenue for you to bring down your credit score. Once you file for bankruptcy, the record stays for years, more precisely, 10 good years for chapter 7 and 7 years for chapter 13. Applying for a new job or getting a new credit card becomes a real struggle.
Consider other alternatives first. Applying for bankruptcy should be the very last option and it should be done in the worst circumstances.
4. Can I Opt to Reaffirm Some Debts?
During a bankruptcy process, you may opt to sign a reaffirmation agreement that guarantees your continued payment of a debt regardless of the fact that the bankruptcy has the capacity to discharge it.
The reasoning behind this is that you may sign an agreement with a creditor such as a home lender so as to maintain the asset from being repossessed by the secured creditor.
5. How Long Does Chapter 7 Bankruptcy Take?
Chapter 7 allows you to clear off huge debts though not all debts are eligible for it. You need an attorney to guide you through the specific details. Once all the documents are filed, a meeting with a court-appointed trustee takes place 20 to 40 days after filing the bankruptcy case who then handles your case.
The estimated time for a chapter 7 bankruptcy from filing to receiving a complete discharge is roughly around 6 months. This, however, is dependent on many factors.
The post 5 Questions You May Have About Filing for Bankruptcy appeared first on Home Business Magazine.
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