5 Things You Should Know Before Filing for Bankruptcy

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Filing for bankruptcy can be a confusing process, and no matter what your finances may look like if you’re considering this right now, it goes without saying that you’re probably very stressed out. Most people only consider bankruptcy as a last choice for their financial struggles, and most people have tried, in vain, many different ways of getting their finances back on track.

If you’re considering filing for personal bankruptcy, here are a few things you should know about what lies ahead:

  • Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two options you can choose from. Chapter 7 is often seen as a “quick fix” because (depending on your debts) you might be able to get many debts “erased” in a short period of time. Chapter 13 is a little more complicated and it involves a restructuring of your debts so that you can create a feasible repayment plan.
  • Although Chapter 7 may seem like the easiest option if you file for bankruptcy, the consequences can last for a while. It’s important to understand that any personal bankruptcy case isn’t as simple as getting your debts erased without making any sacrifices.
  • When you file for bankruptcy, you’ll be expected to turn over any documents related to your personal finances. This includes records of payments (both received and paid out to other), records of any property you own, bills you’ve paid, credit card information, and bank statements. All of this is considered when someone claims bankruptcy.
  • If you are in a relatively stable position (outside of your finances, of course) and you just need assistance with repaying your debts, Chapter 13 may be your best option. This option may allow you to keep more of your personal property, such as your car or home, than Chapter 7 would allow.
  • It can take a while to build up your credit score again after filing for bankruptcy, but it definitely is possible. Many people do find that personal bankruptcy allows them the opportunity to start over and begin building up their financial management skills. All that matters in your situation is whether filing for bankruptcy is right for you.

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