If you’re struggling with debt, you might have heard about declaring bankruptcy as an option. But what does bankruptcy mean and what will it do to your financial record. It isn’t the best choice for everyone, so you should consider carefully whether it’s the right thing for you to do. Before you start the process of filing for bankruptcy, read this information about who it’s for, alternatives to doing it and how to get the process started. By informing yourself before you take any steps, you can ensure that you’re doing the right thing and not making a mistake.
Bankruptcy is a series of laws that allow you to clear your debts and start over. The process is complicated, but for some people it is a useful option when they’re struggling to pay their debts. However, it’s important to understand when and how you should file for bankruptcy before you decide to go through with it. It isn’t a simple, fresh start that will clear all of your debts and cause financial institutions to look upon you favorably. To begin with bankruptcy does not clear some debts, such as taxes and child support. As well as that, it could stay on your financial record for up to ten years. This won’t look good to lenders if you want to borrow money in the future and they could decide not to do business with you. You should only use bankruptcy as a last resort.
Alternatives to Bankruptcy
Before filing for bankruptcy, you should look at your other options. There are several other things you might be able to do to help you deal with your debt. For example, you could hire a professional credit coach or financial coach to help you. Consolidating your credit cards could also help, as could negotiating with creditors to work out a payment plan. You can try to have loans modified or refinanced to assist you out of debt. If you’re unsure of your options, speak to a bankruptcy attorney serving Houston or your local area. They can present alternative options to you, but if none are available, they can get you started on the bankruptcy process.
Filing for Bankruptcy
If you have decided that bankruptcy is your only option, it’s best to hire a lawyer to help you through the process. First you need to know what type of bankruptcy to file for. The two most common types are chapter 7, a straight or liquidation bankruptcy, and chapter 13, allowing you to set up a repayment plan. Before you can file, you must undergo credit counseling, in accordance with the law. You must do this within 180 days of filing your case. Your lawyer will also help you to fill in the BAPCPA means test, which will determine which type of bankruptcy you can file.
After the means test, your lawyer can file for bankruptcy. You will attend a court date, which is to make sure that you told the truth on your bankruptcy petition. The trustee will also make sure you understand the process and agree to what you’re doing.