The financial distress in America is at an all-time high, leading some people to research bankruptcy. Simple financial mistakes seem to set you back a mile. It’s possible that you’re also finding it difficult to meet up your financial obligations. There’s no doubt that all and sundry have the desire to pay their bills, sadly, this sometimes just seems out of reach.
However, have it in mind that you’re not alone. There are multiple helpful options out there. To appropriately take advantage of the option, you should understand the options at your disposal, the benefits, and demerits of these options, and what the options will cost you. Here are some takeaway points in these articles:
- Understanding of how Chapter 7 and Chapter 13 bankruptcy works
- Understanding of what each alternative has to offer
- Free resources that can ease up your debt relief process
- Know the next productive step to take.
What is Bankruptcy?
The simplest definition for bankruptcy is a legal tool for getting debt relief. Some of the debts that get wiped off during bankruptcy include medical bills, credit cards, payday loans, personal loans, etc. these are loans that are not secured by assets.
Expenses and income are evaluated to help users help to understand the capacity to pay back the loan if they’re filing for a bankruptcy discharge.
How many types of bankruptcy are there?
Of all bankruptcy types, the most prominent are Chapter 7, Chapter 11, and Chapter 13 bankruptcy. There’s a bankruptcy type called the Chapter 12 bankruptcy; this is a bankruptcy that covers commercial fishing debt and farm debt. There’s also the much less common Chapter 9 and 15 bankruptcy.
How does Bankruptcy Discharge work?
A bankruptcy court will either issue you a Chapter 7 or Chapter 13 bankruptcy discharge has these are the two most prominent in the US.
Characteristics of Chapter 7 Bankruptcy Discharge
- It is fast as a debtor can get relief in 90 days after filing for a discharge
- Chapter 7 bankruptcy can be quite affordable, compared to Chapter 13.
- A debtor may lose assets that are not protected by state or federal bankruptcy exemptions
- Debtors income must be at a particular amount
- Details of the bankruptcy discharge remain on the Credit Report for a 10 year period
Characteristics of Chapter 13 Bankruptcy Discharge:
- The process of getting a bankruptcy discharge is very slow as the discharge is often given in 3 or 5 years after filing the petition. Many people wonder how much they have to pay back in Chapter 13 payment plan.
- It is much more expensive than the Chapter 7 bankruptcy
- Quite often, the bankruptcy court does not liquidate any of the debtors’ assets
- There’s a monthly payment schedule to adhere to
- There’s no procedure for qualification, and you can always get a discharge if your debt is within acceptable limits.
- Details of this bankruptcy discharge remain on your Credit Report for a 7 year period
Most applicants will first be required to estimate their qualification, use the service of a bankruptcy attorney, do an online course, provide necessary documents, attend meetings, do another online course, and finally get their bankruptcy discharge certificate.
Many people also question whether Chapter 13 bankruptcy is worth it due to the high costs, often leading to dismissal.
What are the bankruptcy attorney fees?
It’s possible that you’re confused about whether you can afford to pay for bankruptcy or not. You’re not alone in this confusion, and there’s a way out.
Most bankruptcy attorneys understand that their clients lack the lump sum to pay for their services. As such, bankruptcy attorneys often offer a payments plan that can make the payment process easier.
The main cost of applying for a bankruptcy discharge entails the filing fee and the attorney consultation fee. While the attorney fee varies, the filing fee is often between $300 to $400.
What are the alternatives to Chapter 7 and Chapter 13 bankruptcy?
Need debt relief but don’t want to file for a bankruptcy discharge? That’s very possible as there are numerous options for bankruptcy. This option will be discussed later below.
Before you file for bankruptcy, it’s imperative that you have it in mind that estimating your income and expense data will help your application massively.
Let’s discuss more on the bankruptcy alternatives below:
Debt Payoff Planning
Your budget has to include your debt payoff strategy. Your debt payoff strategy should be one that lines up your debt and uses avalanche, snowball, or the debt savvy payoff method to totally pay off your debt. You can easily get free Google sheets all over the internet to assist with that.
Negotiate with your Creditors
If you think the same way I do, you’ll opt to find an option that has the most minimal impact on your credit score. Just in case your debtor doesn’t accept negotiations, then skip to the next section.
Most creditors would rather have you stay on your current debt payment plan, this will help them get maximum interest and payments from you. Thus, it’s imperative that you properly articulate your challenges to get any favorable deal from them.
A debt settlement company will help to negotiate your owed amount. The helps to reduce the debt size more significantly than debt management.
Debt management is the process of hiring a debt management company to negotiate the interest rate on your credit card debt. However, before you approach a debt management company, I’ll advise that you approach the company yourself.
What would I do?
Every debt situation is different. As such, what I’ll do depends on the uniqueness of my predicament. After saying that I’ll strongly advise that you use a free bankruptcy calculator to get an estimate on the cost and merits.