As one piles up debts, the might be the temptation to file for bankruptcy. The decision or feeling might leave one feeling hopeless or scared. There are however some options before one decides to declare that they are bankrupt. While filing for bankruptcy will allow one to start afresh, it should not be taken lightly. This is owing to the fact that it comes with some serious consequences. In consideration of filing for bankruptcy CA residents should know what is involved.
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.
The other common one is chapter 13. It allows people to organize their debts again and make payments to creditors over a period of time. It is a process that lasts some 3 to 5 years. Assets of the debtor will not be liquidated and if there is any additional debt that is owed after the required payments, they will be discharged. It is important to note that not everything will be discharged. Even when one files for chapter 7, not everything will be forgiven. There are some debts that cannot be 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 virtually every person is able to file for bankruptcy, issues of income will play a key role. For example, there are people that make lots of money that will imply they are not qualified for chapter 7. For people that file for chapter 13, the amount they earn as income will determine how the restructuring is done. In addition to that, filing is not done for free as one will need services of a qualified attorney. The fees charged by an attorney could be added to the bankruptcy filing. Chapter 13 fees are higher because its process is more protracted.
Bankruptcy destroys credit. Payment history will determine 35 percent of credit score. Deciding to file that one is bankrupt will have long lasting effects on ability to secure loans or utilize credit. Bankruptcies stay on credit for as long as 10 years. During the period, getting credit cards or landing some jobs will be hard. The filing also becomes public record.
When one files for bankruptcy, it will not eliminate all their problems. Whereas it helps in restructuring, if there were bad financial decisions, they will still have an effect on the person. The process does not cure problems that one had.
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.
The other common one is chapter 13. It allows people to organize their debts again and make payments to creditors over a period of time. It is a process that lasts some 3 to 5 years. Assets of the debtor will not be liquidated and if there is any additional debt that is owed after the required payments, they will be discharged. It is important to note that not everything will be discharged. Even when one files for chapter 7, not everything will be forgiven. There are some debts that cannot be 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 virtually every person is able to file for bankruptcy, issues of income will play a key role. For example, there are people that make lots of money that will imply they are not qualified for chapter 7. For people that file for chapter 13, the amount they earn as income will determine how the restructuring is done. In addition to that, filing is not done for free as one will need services of a qualified attorney. The fees charged by an attorney could be added to the bankruptcy filing. Chapter 13 fees are higher because its process is more protracted.
Bankruptcy destroys credit. Payment history will determine 35 percent of credit score. Deciding to file that one is bankrupt will have long lasting effects on ability to secure loans or utilize credit. Bankruptcies stay on credit for as long as 10 years. During the period, getting credit cards or landing some jobs will be hard. The filing also becomes public record.
When one files for bankruptcy, it will not eliminate all their problems. Whereas it helps in restructuring, if there were bad financial decisions, they will still have an effect on the person. The process does not cure problems that one had.
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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