Going bankrupt is not considered by anyone; however, this does not mean it cannot happen. And when it happens, most people are not aware of what to do and how to carry out their financial tasks. This is where a bankruptcy attorney can be of big help. They can guide you with the documentation you need to apply to help you throughout the process. Some basic factors to know if you are considering applying for bankruptcy include:
The types of personal bankruptcy: When filing for bankruptcy, you can apply for two different kinds of bankruptcy. People often apply for bankruptcy when they are in a situation where they can no longer afford to pay their bills or the installments of their loans. In one form of bankruptcy, the filer is no longer liable to pay any debts. This happens when the filer is not in a position to apply for any form of payment plan due to the payments being too high or the filer’s income being too low. However, in a revised version of the bankruptcy law, the filer has to pay off their debts in installments over a period of 3-5 years according to their income status.
Consumers turn to bankruptcy when things get extremely serious: More often than not, bankruptcy is used as the last option for anyone who considers it. This usually happens when an individual faces a major life event that alters their financial situation is a great deal, such as losing a job or going through a divorce. The biggest reason for bankruptcy, however, is suddenly coming across major medical issues that incur large medical bills that an individual is not able to pay.
The state you are residing in affects your bankruptcy file: It is also important to note that where you live will greatly affect the terms of your bankruptcy. Most states differing laws when it comes to filing bankruptcy, and depending on those, it differs in which assets can be placed under protection during the bankruptcy filing process. The state you live in will also have an effect on the fees of the attorney and the filing process.
You can keep your assets: When filing for bankruptcy, what a number of individuals fail to realize is that you will be able to keep many of your assets without them getting affected by the filing. These assets can include your personal electronics, clothes, and furniture in our house. However, when it comes to your larger assets, like your vehicle and family home, it depends on the law of the state you are residing in, your current financial situation and the kind of bankruptcy you file will decide whether you get to keep them or they become government property.
It affects your credit history: When you are considering filing for bankruptcy, it is crucial to know that filing for bankruptcy will greatly affect your credit score as it will stay on your record for the next ten years. Getting loans in the future will cost you more, and banks will be much timider while offering the loan.
While applying for bankruptcy can be a scary process, a good attorney can guide you through it and make the process much less daunting.