Things You Should Know Before You File for Bankruptcy

 Posted on March 29, 2019 in Bankruptcy

Most Americans have some form of debt -- mortgages, credit card debt, student loans, auto loans, and personal loans are all part of consumer debt and most Americans have a combination of them. For many people, the debt can be handled through smart budgeting and curbed spending, but some people need to use other measures. Bankruptcy is used when people can no longer pay their debt and offers a way for those in debt to get a fresh start. The decision to file for bankruptcy is a difficult one, especially since bankruptcy laws are so complex. Here are a few things you should know before you file for bankruptcy:

There Is More Than One Kind of Bankruptcy

For individuals, there are two different types of bankruptcies -- Chapter 7 and Chapter 13. A Chapter 7 bankruptcy is the type that most people associate the word bankruptcy with. In Chapter 7 bankruptcy, most of your unsecured debts can be discharged, meaning you will no longer be responsible for paying them back. In a Chapter 13 bankruptcy, you set up a repayment plan that allows you to repay your debts over three to five years. The kind you choose largely depends on your specific circumstances.

Bankruptcy Is Not Free

Though it may seem counterintuitive, filing for bankruptcy is not free. It can actually become quite expensive. Filing for bankruptcy can cost between a couple of hundred to a couple of thousands of dollars, depending on whether or not you hire an attorney and how much the filing fees end up costing.

Your Credit Will Be Affected

Once you have filed for bankruptcy and your case is finished, you will have to begin the process of rebuilding your credit. Getting a bankruptcy does make your credit score drop, but it does not really matter whether or not you go into the bankruptcy with a high or a low credit score. Most people end up around the same score range after they are done with bankruptcies.

A Kerrville, TX Bankruptcy Attorney Can Help

It can be difficult to make the decision to file for bankruptcy. Some people feel like bankruptcy is a failure, but in reality, it can be the best decision some people make. If you are thinking that bankruptcy may be right for you, you need to talk to an experienced New Braunfels, TX bankruptcy lawyer. Understanding what you are getting yourself into before you file for bankruptcy is crucial, which is why the Law Offices of Chance M. McGhee are here. We can help you figure out which type of bankruptcy is right for you and the most strategic plan to benefit you. Call our office today at 210-342-3400 to schedule a free consultation.

Sources:

https://www.thesimpledollar.com/what-to-expect-when-filing-for-bankruptcy/

https://www.thebalance.com/top-things-to-know-about-bankruptcy-316198

https://www.investopedia.com/articles/pf/07/bankruptcy.asp

https://www.forbes.com/sites/larrymyler/2017/10/03/filing-for-bankruptcy-3-most-important-things-you-need-to-know/#611876127fe6