Negative Impacts
Some people may tell you that bankruptcy is the only way out of a bleak situation. The fact is, bankruptcy doesn’t eliminate all of your problems. First of all, it is expensive to file. When you hire a bankruptcy attorney and pay the filing fees, you could fork out a few thousand dollars. When you file, it doesn’t get rid of all your debt either. Any student loans or payments you owe to the government are still in full force. You must also continue to pay child support and alimony.
Different Types
In most cases, you would either consider a Chapter 7 or a Chapter 13 bankruptcy. In Chapter 13, you work out a plan with the court to repay as much debt as you can in the next few years. In this scenario, you can keep your assets such as your home and car. You must prove to the court that you are staying on a strict budget. Chapter 13 stays on your credit for seven years. If your income is too low to pay back the debt you owe, you can file Chapter 7. Here, the court will sell your assets, and the rest of the debt goes away.
Not a Simple Decision
Unquestionably, you should never consider bankruptcy without first explosion all avenues. Talk to a financial counselor and get advice from qualified professionals.
The effects of declaring bankruptcy can be severe. If you decide this is best for you, make sure you hire an experienced, skilled bankruptcy attorney to make this process as smooth as possible.