Personal Bankruptcy Reasons And Rules

Personal Bankruptcy

Lately a lot of people have to file for bankruptcy because they couldn't pay their debts. It is the toughest decision they had to make. Majority of people perceive inability to manage their debt as a personal failure. Simply speaking filing for bankruptcy is a popular option, and lack of personal bankruptcy information has generated considerable confusion and misinformation, making it difficult for people to get a clear picture about the process, their rights and the consequences. People who contemplate personal bankruptcy must to know, some valuable information.

First

First of all if you happen to owe money to a friend or a relative whom you would prefer to pay back rather than having your debt waived as a part of the bankruptcy process, you can develop a mutually agreeable payment plan. But one thing you need to understand that regardless of identity of the creditor, once you have filed for bankruptcy and received a discharge, you are no longer liable to make repayment.

Second

Secondly, the services provided by a good bankruptcy attorney can be the best way for you to tackle the rigors of filing for bankruptcy. Good legal counsel and guidance can make this stressful period of your life easier and a bankruptcy lawyer is probably the best person to explain to you of your rights, liabilities and give you the right personal bankruptcy data that you need. An attorney can dispel such common myths as loss of the debtor's property to the trustee.

   

Third

And lastly, filing for bankruptcy once in no way disqualifies you from filing again - there is a minimum time limit imposed by the law for successive bankruptcy petitions. However, you need to remember that every time you file for bankruptcy, your credit score will take a beating as major credit bureaus are notified of the fact. This is another piece of personal bankruptcy information that most people are unaware of. Filing for bankruptcy is a traumatic process, but with the right personal bankruptcy information, you can weather the storms associated with the process

Personal Bankruptcy Reasons

Filing for personal bankruptcy is a serious decision that should not be taken lightly. But, bankruptcy can be beneficial and allow you to get a fresh financial start. Here are a few reasons why you may want to file either a chapter 7 personal bankruptcy or a chapter 13 personal bankruptcy.

• You Have Outstanding Medical Bills- A single trip to an emergency room can cost you $20K or more. So, if you suffer a broken leg you and are required to have emergency surgery you can, in an instant, became literally destitute. Therefore, by filing bankruptcy you will likely be able to discharge outstanding medical bills.
• Your Wages Are Being Garnished - When you are sued and a judgment is placed against you the creditor can garnish your wages. This means that money will automatically be taken out of your paycheck. Thus, when you file for bankruptcy you will automatically stop the creditor from garnishing your wages.
• Your Property is being foreclosed - Certain states allow a homeowner to be sued under a deficiency judgment when their house is foreclosed upon. A deficiency occurs when a bank loses money upon selling a house that is foreclosed. Basically, if your owe $100K on your house and the bank can only sell your house for $30K you can be sued for the $70K difference. So, by filing for a bankruptcy you can stop the bank from suing you for the $70K deficiency.
• You Lose a Law Suit- If you lose a lawsuit the other party will then be able to collect on what you owe them via the judgment. By filing for bankruptcy you may be able to stop the other side from collecting their judgment.

These are just a few reasons why filing for a bankruptcy can be useful. However, before filing for a personal bankruptcy you need to consult an experienced bankruptcy attorney. An experienced attorney will tell you the differences between chapter 13 and a Chapter 7 bankruptcy and will be able to advise you if bankruptcy is even necessary. The majority of all bankruptcy attorneys will give you a free consultation. So, if possible you should get a second opinion. So, do not be cheap. See an experienced bankruptcy attorney before you make any decision upon whether or not to file for bankruptcy.

Personal Bankruptcy Rules

People come to this point through different circumstances, and it's important to know the rules of personal bankruptcy before you proceed. If you have never filed before, you may wish to call on the counsel of a reputable bankruptcy lawyer who will help you through the process and explain the language of bankruptcy. You may already be familiar with a few terms, but here are some things to note as you prepare to meet with a firm or bank:

• Know what types of bankruptcy are available to you. You may qualify for Chapter 7, which forgives your debts but would require you to give up some of your more valuable assets like your home, car, or other items to take care of some payments. There is also Chapter 13, which allows you to keep your home but you are placed on a strict payment scheduled until your debts are paid. In both cases, the mark will show on your credit report for 7-10 years.
• Which one is best for you? A bankruptcy attorney will advise you with regards to the program you need, but it's good to read up on both so you know what to expect. In the case of Chapter 7, your financial slate is essentially cleared, and you may be recommended to go this route if you have no large assets to speak of, like a house or boat or truck. Rules for Chapter 7 may vary according to your state of residence, too.
• Credit counseling is mandatory. As part of your filing process, you will be required to go through financial counseling to determine the best course of action. Certification of counseling is included when you file, if you file. During the course of counsel, a financial expert may find another option for you that allow you to keep your personal assets while relieving your debts.
• Not all debts can be forgiven. Bankruptcy isn't a free pass - action is required on your part, and not all of your debts qualify. Student loans, alimony, and dependent support are just some of the types of payments that may not fall under this umbrella.
• It is possible to rebuild good credit. Bankruptcy need not be viewed as the end, but rather the opportunity for a fresh start. While it's true your credit scores will be affected for some time, you can rebuild a good standing financially. Speak with a financial expert on the best steps to take, which could vary from obtaining new credits cards or exhibiting on-time payment of purchases for an extended period.

Personal bankruptcy may seem like a low point in your life, but if you know what to do you can recover in good time and work toward a prosperous future.