Filing for bankruptcy is usually the last resort of a debtor to pay off all his dues and start fresh in life. Doing away with all/ most of your possessions can be tedious and stressful, and is thus important to be aware of the finer nuances of filing for bankruptcy before embarking on the venture.
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are most common among debtors who file for bankruptcy. Chapter 7 is where you will have to part with most of your possessions, which will be liquidized in order to pay off all or most of your debts. However, certain financial obligations such as child support are not dischargeable and you will have to find ways to pay them off on your own.
You are only eligible for filing a Chapter 7 is you do not earn enough to pay off your debts or if you have not received a discharge to a Chapter 7 recently. You will have to speak to your lawyer about the other factors that need to be considered before filing for bankruptcy.
Hiring an Attorney
Filing for bankruptcy requires you to take care of huge volumes of paperwork and fill out numerous forms. It also requires you to list your assets and categorize them accurately before they are presented before the court of law for further proceedings. Hiring a lawyer will help make this tedious process easy, thus allowing you to focus on more pressing matters. A lawyer will also assist you in planning out your secured debts, such as a mortgage or a car loan.
Although it is quite possible to file a bankruptcy without the assistance of an attorney, it is always recommended that you have some legal consultation on your side before going through with filing for bankruptcy.
Once you have filed for bankruptcy, the court will take over all your non-exempt property and debts. This will discourage all creditors from approaching you or claiming a share of your assets. The courts will then appoint a trustee on your behalf who will ensure that all the creditors are paid off, as much as possible, in due time.
Bankruptcy can temporarily suspend a number of privileges such as renting a house/ car or owning credit cards. However, if you prove that you are back on a secure financial track you will be allowed to enjoy these luxuries again.