As one piles up debts, the might be the temptation to file for bankruptcy. The decision or feeling might leave one feeling hopeless or scared. There are however some options before one decides to declare that they are bankrupt. While filing for bankruptcy will allow one to start afresh, it should not be taken lightly. This is owing to the fact that it comes with some serious consequences. In consideration of filing for bankruptcy CA residents should know what is involved.
There is more than one type that one can opt for. Each of the types has its restrictions and outcomes that are different. Chapter 7 bankruptcy is also called liquidation. When one files for this, they will allow debtors to discharge most of their debts. It requires a debtor to liquidate or sell most assets so as to pay what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
Debts that cannot be discharged include student loans, child support, most taxes and real estate liens. In addition to that, it is possible for debtors to oppose discharge of debts that they are owed. If they file their opposition and win, you will still be owing the money. Income of an individual matters when they are filing that they are bankrupt.
While all people can file that they are bankrupt, income could disqualify one or affect what they can file for. For instance, some people cannot file for chapter 7 owing to what they earn. For people who file for chapter 13, their income will influence and determine how debt restructuring is done. It is also not free to file. One will need to hire an attorney to oversee the process, further adding to the costs. The fees of attorneys might be added to the bankruptcy filing. Chapter 13 filing is costlier since the process takes much longer.
Bankruptcy will destroy your credit. The payment history affects 35 percent of credit score of the individual. Therefore, when one decides to file that they are bankrupt, it will have lasting effects on their ability to get loans or utilize credit. The information will stay on credit for 10 years or so. During that time, landing some jobs or getting credit cards will not be easy. Also, the filing is made public.
Filing that one is bankrupt does not solve all problems. Most of the time, people become bankrupt because of poor financial decisions. As such, the same problems might still persist even after they have successfully filed that they are bankrupt.
There are various options that one can go for. You could renegotiate debts with creditors or create a payoff plan. For some people, consolidation is a good option, where they consolidate high-interest debts into a loan with less interest.
There is more than one type that one can opt for. Each of the types has its restrictions and outcomes that are different. Chapter 7 bankruptcy is also called liquidation. When one files for this, they will allow debtors to discharge most of their debts. It requires a debtor to liquidate or sell most assets so as to pay what they owe.
Another common one is called chapter 13. With this, one will be allowed to reorganize debts that they have and pay creditors over some time. The process could take as long as 5 years. Debtor assets do not get liquidated and should there be any additional debts owed after payments have been made, they are discharged. Not all things will be discharged though. Even when you apply for chapter 7, they are not forgiven all that they owed. There are debts which are not discharged.
Debts that cannot be discharged include student loans, child support, most taxes and real estate liens. In addition to that, it is possible for debtors to oppose discharge of debts that they are owed. If they file their opposition and win, you will still be owing the money. Income of an individual matters when they are filing that they are bankrupt.
While all people can file that they are bankrupt, income could disqualify one or affect what they can file for. For instance, some people cannot file for chapter 7 owing to what they earn. For people who file for chapter 13, their income will influence and determine how debt restructuring is done. It is also not free to file. One will need to hire an attorney to oversee the process, further adding to the costs. The fees of attorneys might be added to the bankruptcy filing. Chapter 13 filing is costlier since the process takes much longer.
Bankruptcy will destroy your credit. The payment history affects 35 percent of credit score of the individual. Therefore, when one decides to file that they are bankrupt, it will have lasting effects on their ability to get loans or utilize credit. The information will stay on credit for 10 years or so. During that time, landing some jobs or getting credit cards will not be easy. Also, the filing is made public.
Filing that one is bankrupt does not solve all problems. Most of the time, people become bankrupt because of poor financial decisions. As such, the same problems might still persist even after they have successfully filed that they are bankrupt.
There are various options that one can go for. You could renegotiate debts with creditors or create a payoff plan. For some people, consolidation is a good option, where they consolidate high-interest debts into a loan with less interest.
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