Are you left with a small amount of money out of each paycheck due to paying back owed debts? If you are struggling to take care of all or your daily needs, the solution to the problem might be to file for bankruptcy. This article covers a few of the things you might want to know before bankruptcy is filed.
1. What Types of Personal Bankruptcy You Can File
Filing for bankruptcy is ideal because it will allow you to be forgiven of your debts to stop wage garnishment, or to make long-term payment arrangements with creditors. For instance, if you opt for Chapter 7 bankruptcy, you might not have to pay your creditors any money. However, it is also possible for some of your assets to be seized and sold to use the funds for paying creditors. Chapter 13 bankruptcy is an option that allows you to keep your assets and come up with a payment plan for paying off your debts within three to five years.
2. How Your Credit Score Will Be Affected
Your credit score will be lowered after filing for bankruptcy. However, you will be able to work on raising the score back up to a satisfactory number by not falling behind on bills again. You must also keep in mind that bankruptcy will remain on your credit record for 10 years with Chapter 7, and seven years with Chapter 13.
3. How Calls From Creditors Are Affected
After you have filed for bankruptcy, creditors will no longer be allowed to request that you pay them any money, including with Chapter 13 when you are making payments. If you continue receiving phone calls from debt collectors, you can take legal actions to make them stop and file a lawsuit for harassment. An automatic stay will go into effect as soon as you complete the process of filing bankruptcy.
4. Why You Should Consult With an Attorney
It is in your best interest to hire an attorney for assistance with filing for bankruptcy. He or she will help you decide whether or not Chapter 7 or 13 is best for your specific debt situation. For instance, sometimes Chapter 13 is recommended when you don't have many debts and can pay them off in small amounts per payment. An attorney will also calculate your debts and income to figure out if there is a good chance that a judge will approve your bankruptcy petition.
For more information, contact a bankruptcy attorney like those at Shoemaker & Dart P.S. Inc.