Filing for bankruptcy should and will be your last option if you end up having too much financial burden. If you just got unemployed or having a hard time making your regular payments for your debts, you can declare financial insolvency to alleviate your money problems. However, you must keep in mind that bankruptcy can give you negative remarks in your credit report. The whole bankruptcy process can be complex, too. Hence, you must know more information about bankruptcy before you file. This can help you assess your situation and weigh the important things that may involve in your bankruptcy petition.
Should I Get Counseling?
Your credit counselor or bankruptcy lawyer is the right person you should talk to prior to your filing for bankruptcy. Finance experts recommend that bankruptcy must be your last option to pay your multiple debts. This means you need to learn about your bankruptcy alternatives to pay off your financial dues. For instance, if you have passive income that you can liquidate from your invested assets like stocks or ETF trading, you might want to use those first before eventually deciding to file for bankruptcy. If you have decided to continue your bankruptcy petition, counseling can also provide you with the necessary information that you should learn
What Are The Types Of Bankruptcy?
There are several types of bankruptcy. You should learn them to know which kind you must apply for. There is Chapter 7 bankruptcy which will liquidate your assets to repay your debts. On the other hand, you can declare Chapter 13 bankruptcy that requires you to use your salary to repay your creditors. The bankruptcy court will help you make an effective repayment plan to manage your debts.
How Will I Declare Bankruptcy?
You need to complete a petition form if you want to declare bankruptcy. To make the paperwork process more convenient, you can submit a skeleton form of your debts and assets to the bankruptcy court. The court can give you up to 15 days to gather all the necessary documents for your petition when you do this.
Then, you can compile the financial papers that the court asks you to submit. Some of the documents that you must have include the records of your lenders and the worth of debts that you borrowed from them. You should also include the report of your credit card statements, bank accounts, and pay slips, other streams of passive income like bonds, mutual funds, annuities, and ETFs trading when you fill out your bankruptcy petition. In addition to these, you must also have the list of your current expenses.
What Will Happen After My Bankruptcy?
A lot of people are able to pay off their debts after filing for bankruptcy. But, do not expect that all your debts will be paid off at once you declared bankruptcy. Debts such as alimony and child support will not be settled even if you filed for financial insolvency.
Moreover, you can still apply for loans and acquire debts even if you have past bankruptcy. This should not be a problem because you can still find mortgages or credit cards that have affordable interest rates offered to individuals with bad credit history so you can rebuild your credit.
