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When to File


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When to File

How To Know When Bankruptcy
Is The Best Option

There is nothing enjoyable about going through a bankruptcy; even the word itself is horrible, and yet the media takes great delight in highlighting rich and famous sports stars and celebrities who have had to go through the process. Mike Tyson, Kim Basinger, and Marvin Gaye are good examples of people who had the world at their feet and then for whatever reason had to file for bankruptcy. The reality is that there are very few people on this earth who are exempt from the possibilities of bankruptcy, and it is essential to understand that there is no shame in having to file.

It could be argued that the American economy is built upon debt; we all receive credit card offers via the mail on a daily basis, people no longer save up and buy material items, it has become the norm to finance virtually everything on credit. But for some people, there comes a time when the pressure gets too much when sleepless nights and panic attacks happen weekly, and it is time to make the decision to file for bankruptcy.

When you are living in the middle of the nightmare, it can be easy to talk yourself into filing for bankruptcy, and then out of it again, sometimes within the space of a couple of minutes. To try and counteract this we have compiled a list of questions you can ask yourself to solidify your current financial situation in your own mind. When it comes to dealing with bankruptcy, it is critical to deal with facts rather than emotion, so the answer to most of these questions is either yes or no. Answer them honestly, and do not attempt to come up with excuses or justifications.

  • Do you only ever make minimum payments on your credit cards?
  • Do you and your partner honestly know the total amount of debt you are in?
  • Do you avoid dealing with your finances due to fear?
  • Do you have to use your credit cards at the end of every month just to buy essentials?
  • Have you researched debt consolidation?
  • Have bill collectors already started to call you?

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Ignoring The Problem Is The Worst Thing You Can Do

Go through your answers above; if you answered yes to two or more of the questions, then at a minimum, you need to evaluate your financial situation properly. The reality is that if you have answered yes to any of the questions, you have an idea that you may be in over your head. Many people think that bankruptcy is when you owe many thousands of dollars, but the amount of debt is only one factor. In layman’s terms, bankruptcy is when you owe more money than you can afford to pay.

Get A Piece Of Paper and a Pen

There is nothing to be gained from guessing in this situation. Now is the time to get a clear understanding of the gravity of the situation, and the only way to accomplish this is to write down a full and comprehensive list of all your liquid assets. You might be surprised how many of those you have, they include things like retirement funds, stocks, properties, motor vehicles, and other non-bank account funds. You do not need to be 100 percent accurate for every item, but try and be honest and realistic with yourself.

Having added up all of your assets, it is now time to do the same with your debts. Remember to include loans, credit cards, and any outstanding bills. Now compare the two totals, and you will easily be able to see whether your assets are larger or smaller than your debts. If your debts are larger, then filing for bankruptcy may be an option, but do not think that this is an easy solution to your situation. It can and does have many implications, so do not be tempted into making rash decisions.

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How Do I Declare Bankruptcy?

There are two ways in which you can become bankrupt. The first one is probably the more favorable choice, as it allows you to remain in control of the process to a certain degree. This is because you voluntarily file for bankruptcy. The alternative option is when your creditors go to court and ask the court to declare a person bankrupt.

Once you have decided to file for bankruptcy, there are other decisions to make, including the type of bankruptcy you want to file for, as there are benefits and drawbacks to each choice. Everyone at Bankruptcy Help can answer any questions you may have, and will happily guide you through the process.

There are three main types of bankruptcy, and each one is explained in depth in other sections of this website. They are

Chapter 7
Chapter 11
Chapter 13

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Do Not Be Scared Of Bankruptcy - Sometimes It Is The Best Solution For You and Your Family

Nobody likes to admit that they have failed, and not many people want to ask for help. There is a huge stigma around failing with money, which can prevent people from seeking help or advice. The government understands this, which is one of the reasons why bankruptcy laws were created. The laws are there for your protection as well as your creditors. The best time to deal with your financial situation is here, and now, the problems will not go away, the phone will not stop ringing, and every day will just magnify the problem.

The quicker you grasp the nettle and deal with the problem, the easier it will be to solve; trying to avoid bankruptcy could be a poor decision and cause even more problems further down the line. It will cost you very little to find out your options; it could cost you a lot more to keep on avoiding the problem. Filing for bankruptcy could give you a fresh start, providing you with the lifeline you need to steer your ship back to shore.

Information is power, so do not waste any more time. Contact our team today and get all of your questions answered quickly so that you can make the right decision for you and your family.

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Frequently Asked Questions

There usually are court costs associated with filing for bankruptcy, and the costs will vary depending on the type of bankruptcy, and your current financial situation. At the time of writing, the cost of filing for a Chapter 7 Bankruptcy is $306 and for a Chapter 13 Bankruptcy $281. Some courts may also charge an additional administration fee. The good news is that in most cases, it is possible to pay the filing fee in installments. Some courts may also waive the filing fee for a Chapter 7 Bankruptcy if you can demonstrate that your income is below a certain level, and the court decides not to allow you to pay the filing fee in installments. Whether you use a company like Bankruptcy Help or an attorney, there will be additional fees payable, and it is standard practice to pay upfront for those services, particularly in the case of a Chapter 7 Bankruptcy.

It is a common misconception, that once someone is declared bankrupt that all of their debts are discharged, but this is not the case. The first thing to be aware of is that bankruptcy will not cover any debts which were incurred after you filed for bankruptcy, and which were not mentioned during the filing process. There are other debts that are not covered by bankruptcy. These include but are not limited to

• Student Loans
• Any Fines That Are Owed To A Government Unit Such As A City or State
• Any Outstanding Debts For Income or Property Taxes
• Child Support or Alimony Debts
• Any Fines You Have Received As Part of a Criminal Prosecution

Debts that you have obtained fraudulently may not be discharged. For example, if before filing for bankruptcy, and knowing that this was your intention, you decide to go on a spending spree with your credit card, spending money on a vacation, then this may be considered fraud if it can be proven that you had no intention to pay the debt.

In total, there are four different types of bankruptcy available to individuals, and each has specific conditions that must be met.

Chapter 7 - Perhaps the most well known and severe type of bankruptcy. This typically takes between two and three months and involves the sale of your residential property to pay off your debts.
Chapter 11 - A highly complicated process, predominantly targeted towards business debtors, but in some instances, it may be suitable for individuals with substantial debts and assets.
Chapter 12 - A type of bankruptcy very similar to Chapter 13, but exclusively available to family farmers and fishermen.
Chapter 13 - A court-supervised repayment plan which is designed to repay an agreed percentage of your total debt, over a period between 3 and 5 years.

Chapter 7 and Chapter 13 are the most frequently used options; Chapter 13 is preferable in most situations, as it enables the person filing for bankruptcy to retain their property, versus Chapter 7 where they must sell it to clear their debts.

The fact that you have filed for bankruptcy will be registered on your credit report. If you filed for a Chapter 7, then it will remain on the file for ten years, and for seven years if you filed for section 13. However, although obtaining credit will initially be more challenging, it will not prevent you from ever obtaining credit again in the future.

There are probably hundreds if not thousands of reasons why any honest hard-working individual could find themselves in financial difficulty. The bankruptcy laws were designed to provide people with a second chance, and a fresh start. On the other side of the equation, the laws were also intended to ensure that all creditors are treated equally. Once the bankruptcy process is complete, your creditors are prevented from trying to collect any outstanding debts, and as a consequence, you are then able to move forward with your life.

When a debt is said to be discharged, the debtor is no longer legally obligated to repay the debt, and the creditor is prohibited from trying to enforce payment. It is essential to understand that if someone else co-signed on an agreement, they would remain liable for the debt. Finally, if the debt was a secured loan, where you agreed to use property as collateral for the loan, then your creditor may still be entitled to repossess the property, should you not repay the loan. In situations like this, you are advised to speak to our friendly customer service team who will be able to provide you with the correct advice or provide you with the details of a bankruptcy lawyer.