As one piles up more debts, there will be the temptation to file for bankruptcy. The decision could leave the person feeling confused and hopeless. There are however various other options before one decided to take that step. Filing that one is bankrupt might help in starting over but the decision must never be taken on a light note. In considering filing for bankruptcy CA residents ought to be versed with what is involved.
There are various types of bankruptcy that can file for. Each of them will usually have restrictions and different outcomes. There is chapter 7 that is also called liquidation. When an individual files for it, they will be at liberty to discharge most debts owed. The debtor will be required to liquidate their assets or sell them to settle what they owe.
The other common one is chapter 13. It allows people to organize their debts again and make payments to creditors over a period of time. It is a process that lasts some 3 to 5 years. Assets of the debtor will not be liquidated and if there is any additional debt that is owed after the required payments, they will be discharged. It is important to note that not everything will be discharged. Even when one files for chapter 7, not everything will be forgiven. There are some debts that cannot be 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 are various types of bankruptcy that can file for. Each of them will usually have restrictions and different outcomes. There is chapter 7 that is also called liquidation. When an individual files for it, they will be at liberty to discharge most debts owed. The debtor will be required to liquidate their assets or sell them to settle what they owe.
The other common one is chapter 13. It allows people to organize their debts again and make payments to creditors over a period of time. It is a process that lasts some 3 to 5 years. Assets of the debtor will not be liquidated and if there is any additional debt that is owed after the required payments, they will be discharged. It is important to note that not everything will be discharged. Even when one files for chapter 7, not everything will be forgiven. There are some debts that cannot be 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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