Filing bankruptcy is a big step toward financial freedom when your bills are pulling you deeper and deeper into debt. There seems to be a lot of misconceptions about bankruptcy that you shouldn’t fall for if you are considering filing for this relief.
One thing that can impact the way that a bankruptcy will effect you is the type of bankruptcy you file. There are two primary types of consumer bankruptcies, Chapter 7 or Chapter 13. These are very different, so make sure you learn about the specifics of the type you are filing.
You must be fully honest during the process
You can’t think that it is acceptable to be less than fully honest during any point in the bankruptcy process. The star of the reality television show Dance Moms, Abby Lee Miller, was sentenced to time in prison for bankruptcy fraud because she wasn’t fully honest about matters related to the case she filed. Every step of the process is something that must be taken seriously. You need to check and recheck what you are stating or claiming so that you can ensure it is fully accurate.
This isn’t a quick or cheap answer to your problems
Filing bankruptcy takes time. You can expect that a Chapter 7 bankruptcy to take four to six months in most cases. Chapter 13 bankruptcies take longer — typically three to five years. The cost of a bankruptcy must be considered as well. Youmust pay filing fees, attorney fees and other expenses that come with the process. It is possible for some people, depending on their income level, to qualify for reduced filing fees. This is based on the federal poverty level, so many filers won’t qualify for this exception.
Co-signers are impacted by bankruptcy
A bankruptcy only impacts you. If you have co-signers on loans or bills, you need to realize that the creditor can go after them for the money that is due. The bankruptcy will only relieve you from the debt. You should discuss this repercussion of your bankruptcy filing with your co-creditors. This gives them a chance to figure out a plan of action instead of being blindsided by the filing.
When you are ready to file for bankruptcy, you need to look into both types of consumer options so that you can determine for which you qualify and which will best meet your financial goals. From there, you can ask questions to find out exactly how the filing will impact you.
