As debts pile up, one might be tempted to file for bankruptcy. It is a feeling that might leave an individual feeling scared and hopeless. However, there are some options before it gets there. While doing the filing could help one start over, it is one decision that must not be taken lightly. This is because there are serious consequences that it comes with. When considering bankruptcy CA residents need to know some information about it.
There are various type of bankruptcy that one can qualify for. They all have their restrictions and final outcome will also be different. Chapter 7 bankruptcy is called liquidation. This is whereby after filing for it, they are allowed to discharge majority of their debts. The debtor will be required to sell or liquidate assets that they have so that they are able to pay off what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
The examples of debts which are never discharged include most taxes, real estate liens, child support and student loans. Further to that, there is possibility that debtors might lodge opposition to what they are owed being discharged. Should they win, it will mean the debtor will still owe the amounts in question. The income of those filing for bankruptcy will determine a lot.
While anyone is able to file that they are bankrupt, income might disqualify them. For instance, there are those that make too much money to file for chapter 7. For those that file for chapter 13, amount that they make impacts a lot on the way their debts will be structured. At the same time, one should know it is never free to do filing. There will be need to hire an attorney. Attorney fees could be added to the filing. Fees for chapter tend to be higher because the process takes longer.
Bankruptcy will destroy your credit. The payment history affects 35 percent of credit score of the individual. Therefore, when one decides to file that they are bankrupt, it will have lasting effects on their ability to get loans or utilize credit. The information will stay on credit for 10 years or so. During that time, landing some jobs or getting credit cards will not be easy. Also, the filing is made public.
Filing that one is bankrupt will not cure the root problems. While it helps to restructure debt or discharge, it will not cure problems that one had in the first place. Filing that one is bankrupt could be because of some poor financial decisions, which might still be there.
There are different options to go for. One option is to renegotiate debts with your creditors. Other people prefer to create payoff plan. For others, the best way out is debt consolidation. This is whereby they take low interest loans to cater for many high interest debts.
There are various type of bankruptcy that one can qualify for. They all have their restrictions and final outcome will also be different. Chapter 7 bankruptcy is called liquidation. This is whereby after filing for it, they are allowed to discharge majority of their debts. The debtor will be required to sell or liquidate assets that they have so that they are able to pay off what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
The examples of debts which are never discharged include most taxes, real estate liens, child support and student loans. Further to that, there is possibility that debtors might lodge opposition to what they are owed being discharged. Should they win, it will mean the debtor will still owe the amounts in question. The income of those filing for bankruptcy will determine a lot.
While anyone is able to file that they are bankrupt, income might disqualify them. For instance, there are those that make too much money to file for chapter 7. For those that file for chapter 13, amount that they make impacts a lot on the way their debts will be structured. At the same time, one should know it is never free to do filing. There will be need to hire an attorney. Attorney fees could be added to the filing. Fees for chapter tend to be higher because the process takes longer.
Bankruptcy will destroy your credit. The payment history affects 35 percent of credit score of the individual. Therefore, when one decides to file that they are bankrupt, it will have lasting effects on their ability to get loans or utilize credit. The information will stay on credit for 10 years or so. During that time, landing some jobs or getting credit cards will not be easy. Also, the filing is made public.
Filing that one is bankrupt will not cure the root problems. While it helps to restructure debt or discharge, it will not cure problems that one had in the first place. Filing that one is bankrupt could be because of some poor financial decisions, which might still be there.
There are different options to go for. One option is to renegotiate debts with your creditors. Other people prefer to create payoff plan. For others, the best way out is debt consolidation. This is whereby they take low interest loans to cater for many high interest debts.
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