Given the struggles in today's economy, it is understandable if you
do not wish to burden friends and family with your financial problems.
When you are barely making ends meet and unable to pay certain bills to
satisfy others, there comes a sense of shame that you would rather not
expose. Filing for personal bankruptcy may become an option, but know
that doing so doesn't necessarily mean failure. People come to this
point through different circumstances, and it's important to know the
rules of personal bankruptcy before you proceed.
If you have never
filed before, you may wish to call on the counsel of a reputable
bankruptcy lawyer who will help you through the process and explain the
language of bankruptcy. You may already be familiar with a few terms,
but here are some things to note as you prepare to meet with a firm or
bank:
1) Know what types of bankruptcy are available to you. You
may qualify for Chapter 7, which forgives your debts but would require
you to give up some of your more valuable assets like your home, car, or
other items to take care of some payments. There is also Chapter 13,
which allows you to keep your home but you are placed on a strict
payment scheduled until your debts are paid. In both cases, the mark
will show on your credit report for 7-10 years.
2) Which one is
best for you? A bankruptcy attorney will advise you with regards to the
program you need, but it's good to read up on both so you know what to
expect. In the case of Chapter 7, your financial slate is essentially
cleared, and you may be recommended to go this route if you have no
large assets to speak of, like a house or boat or truck. Rules for
Chapter 7 may vary according to your state of residence, too.
3)
Credit counseling is mandatory. As part of your filing process, you will
be required to go through financial counseling to determine the best
course of action. Certification of counseling is included when you file,
if you file. During the course of counsel, a financial expert may find
another option for you that allows you to keep your personal assets
while relieving your debts.
4) Not all debts can be forgiven.
Bankruptcy isn't a free pass - action is required on your part, and not
all of your debts qualify. Student loans, alimony, and dependent support
are just some of the types of payments that may not fall under this
umbrella.
5) It is possible to rebuild good credit. Bankruptcy
need not be viewed as the end, but rather the opportunity for a fresh
start. While it's true your credit scores will be affected for some
time, you can rebuild a good standing financially. Speak with a
financial expert on the best steps to take, which could vary from
obtaining new credits cards or exhibiting on-time payment of purchases
for an extended period.
Personal bankruptcy may seem like a low
point in your life, but if you know what to do you can recover in good
time and work toward a prosperous future.