Bankruptcy law is often misunderstood. Many people who could benefit from filing for bankruptcy do not file because they do not know the truth about bankruptcy. Here are some myths and the true story about bankruptcy.
It might start with one missed payment, but before you know it, you can wind up in a position that it seems impossible to ever climb out of debt. As your debt increases, so does your stress. Bill collectors call constantly. Credit cards are rejected at the store.
Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 stays on for 7 years. Unfortunately, a low credit score can even raise your auto insurance rates in many states. It may seem like an uphill battle after you emerge from bankruptcy, but your credit score can improve substantially in just a few years.
Sometimes bankruptcy is the best way to address overwhelming debt and start your financial life over with a clean slate. However, the bankruptcy laws and processes are complex and it’s easy to make a mistake. That’s why the guidance of a knowledgeable bankruptcy attorney is so essential.
When secured creditors repossess collateral, often a vehicle, it is possible to have it returned by filing for bankruptcy. The debtor must immediately file a bankruptcy petition and motion for turnover against the creditor that repossessed the property. The entity in possession of the property should be not...
When choosing an attorney, look for one who has extensive experience in successfully helping clients avoid bankruptcy. An attorney can help you better negotiate with creditors and create a more manageable repayment plan. A knowledgeable bankruptcy lawyer can also help you understand your rights as a consumer...
Since there is no debt limit for individuals in Chapter 7 bankruptcy, a worsening of your financial situation or increase in debt will not affect your eligibility. Chapter 7 bankruptcies are considered no-asset cases, and debtors have an ongoing duty to disclose financial information and update your information if the filings you previously submitted are no longer accurate.
Chapter 13 bankruptcy is only available to individuals, sole proprietorships, and individuals who are self-employed or operating an unincorporated business. Corporations or partnerships do not qualify for this type of bankruptcy. There are debt limits for qualifying for Chapter 13 bankruptcy, which is tied to the consumer price index.
Chapter 7 bankruptcy proceedings are no-asset cases, and do not include a debt reorganization or payment plan filing. Although a debtor is permitted to keep certain “exempt” properties, the bankruptcy trustee gathers any remaining assets and sells them in a process of liquidation.
To discharge debts in Chapter 7 bankruptcy, an individual must demonstrate that he or she has very little income to pay off debts. As opposed to the reorganization of Chapter 13 bankruptcy, Chapter 7 is an asset liquidation process, so if you have a steady income, you may not qualify.