For those who are suffering from financial hardship and can’t see the light at the end of the tunnel, it can be difficult to have limited options to regain your standing. Bankruptcy is often the most viable option for those who have significant debt. If you’re looking into declaring bankruptcy, there are a few relevant facts to understand in advance.
1. Complete Disclosure is Required
If you plan to file bankruptcy, expect to provide complete disclosure about your finances to ensure that you can be discharged of your debt. You’ll be expected to have accuracy with the information that you provide and avoid withholding any information or facts about your case. You’ll need to be prepared to list all of your property, creditors, and debts.
2. It Can Be Expensive
According to National Bankruptcy Forum, “First off, bankruptcy filers must pay a filing fee. For a Chapter 7 case, the fee is $335. For a Chapter 13 case, the fee is $310. The Bankruptcy Trustee may charge a fee of $15 to $20 when you file, as well. You may request to pay the filing fees in installments; most courts will allow it if you can show it would be a financial hardship to pay all at once.” Although you may be drowning in debt, you’ll still need to pay money to file bankruptcy, which isn’t always cheap. The cost will be influenced by if you hire an attorney, which can cost hundreds to thousands of dollars. If you choose to file without the help of a legal professional, you’ll still need to pay for the filing fees.
3. Your Credit Will Be Affected Long-term
Although you may find relief by filing for bankruptcy, it doesn’t mean that your credit will improve once your debt is forgiven. Bankruptcy can affect your credit long-term, which can make it difficult to apply for loans or finance a car. Although you may have opportunities to borrow money in the future, it can come with hefty interest rates and fees.
4. Chapter 13 Can Offer Relief
CrediReady says that, “thirty percent of all consumer-based bankruptcies are in the form of Chapter 13.” Many people choose to file chapter 13 bankruptcy because it can allow you to keep your assets and pay back the debt over a five-year period. You can avoid foreclosure by having more time to pay off your remaining balances with an extension on the deadlines.
5. Some Debts Can’t Be Discharged
There may be some debts that can’t be discharged when filing chapter 7 bankruptcy, which includes auto loans, child support, tax debts, and mortgages. You may need to seek another solution if most of your debts can’t be discharged.
Understanding the various facts and requirements of filing for bankruptcy can allow you to decide if it’s the right choice for you, based on your financial situation. Researching in advance can help you to make an informed decision that can offer relief in the future.