(Newswire.net — September 23, 2019) — For anyone finding it difficult to clear debts and mortgages, then filing for bankruptcy can act as a relief before you losing everything that you own.
Even though it is best to leave the bankruptcy proceedings to professional bankruptcy law firms like chorchesbankruptcylaw, it is also essential that everyone understands how bankruptcy works.
Today we are here with an article that focuses on some of the crucial points that you should be aware of before filing for bankruptcy.
5 Important Points to Understand Before Filing for Bankruptcy
Who Can File for Bankruptcy?
Anyone with documents indicating a low income and inability to repay debts can technically file for bankruptcy.
However, the rules that dictate the eligibility of bankruptcy varies across states in the United States. Therefore, you must research the local bankruptcy laws in the state you currently live.
Should You Hire a Bankruptcy Lawyer?
To declare bankruptcy, you will have to file a lot of paperwork with the court as well as with the lenders who have lent you money. Even though it is not impossible to do individually, you will have to first research about the technicalities before taking each step.
On the other hand, hiring a professional bankruptcy lawyer will ensure that all the proceedings are taken care of. Moreover, you can also get expert advice on the steps to follow to restructure your debt after being bankrupt.
What is the difference between Chapter 7 and Chapter 11 Bankruptcies?
There are different “chapters” of bankruptcy that can be filed in the United States of America, depending on the eligibility criteria and type of protection expected. Among all the chapters, Chapter 7 and Chapter 13 are the two main types.
Chapter 11 bankruptcy, also called “rehabilitation bankruptcy”, allows reorganization of debts that is done by changing the terms of the loan or by reaching a final reduced settlement amount.
In chapter 7 bankruptcy, also known as “liquidation bankruptcy”, there are no possibilities of debt reorganization. Hence, the business or individual facing bankruptcy needs to sell any possible assets and pay off the lenders.
How Much Does It Cost to Declare Bankruptcy?
It costs between $1500 to $4000 depending on the type of bankruptcy you are filing to complete the proceedings.
However, keep in mind that cheap is not always the best, therefore do not try to pick a bankruptcy lawyer based only on how affordable they are.
Does Declaring Bankruptcy Affect the Credit Score?
Bankruptcies are listed within your credit history and will remain shown for up to 10 years. However, the older a bankruptcy listing is, the less power it will have in terms of discouraging lenders from offering you a loan or any other financial service.
Final Words
We have tried to include some of the most crucial information related to filing bankruptcy in this article. Regardless of whether you hire a lawyer or not, make sure to clearly understand all the procedures of declaring bankruptcy to avoid any mistakes.