Many people are facing financial difficulty and a percentage of those people will undoubtedly declare themselves bankrupt. In general people who file a bankruptcy petition in court will file for either a Chapter 7 or a Chapter 13 bankruptcy. Unemployment rates have hit an all- time high and this has had a significant impact on the nation’s economy. Vast numbers of people find that they cannot meet the repayments on their credit cards and debts and some families may face the threat of foreclosure. Going bankrupt is not good for the soul but it no longer carries the immense social stigma that it once did. However anyone who is considering declaring bankruptcy needs to understand that the action will have a long term impact on their future financial situation.
In certain circumstances people who have filed for bankruptcy find that they are no longer able to attain any form of credit. If they are lucky enough to find a company who will offer finance to bankrupts then they may have to pay exorbitant interest rates. Bankruptcy can change your life forever the event in itself is traumatic but the aftermath may have a lasting impact. After filing for bankruptcy you may have to rent a home for you and your family to live in and many bankrupts find that a high percentage of landlords are hesitant to let homes to newly declared bankrupts. If the owner of the property is able to see that you have a good credit history then you are half way there because every landlord needs to know that their tenants can meet the monthly rental payments.
Of course many of us have valid reasons for going bankrupt and it is important to remember that any bankruptcy judgement affects your credit score for ten years. If your credit score is particularly low then you will find it difficult to be accepted for store credit financing programs checking accounts credit cards and you could be unable to secure a car loan. Unemployed people who file for bankruptcy could well find that they face difficulty in finding a suitable position. No one should file for bankruptcy before considering all of their options and it is essential to look at the benefits and disadvantages of both Chapter 7 and Chapter 13 bankruptcy.
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File for bankruptcy under Chapter 7 and in general any outstanding debts are erased. It is important to consider that the laws vary from state to state so it is essential to hire a good lawyer to advise you. Under Chapter 7 the entire bankruptcy procedure takes around six months so the process is not long and drawn out. Chapter 7 bankruptcy filing states that the person who is being declared bankrupt will more than likely stand to lose any valuable property ( in certain cases some properties may be protected by the laws of the state). However there are a number of types of loans that are immune from Chapter 7 laws. People who are debt ridden can file for this type of bankruptcy just once in every eight years but their credit score will remain affected for ten years.
When filing for Chapter 13 bankruptcy the debtors will offer some form of repayment plan to their creditors. The debts are not wiped out but the debtors are simply given a lengthy period of time to pay their debts. After attending the court hearing and presenting the repayment plan the debtor then has five years grace. This means that the debtor has five years to get life back on track before he is expected to implement that repayment plan. It is interesting to note that the plan has to be created using your post-bankruptcy income so many people are forced to make massive financial cutbacks to meet those repayments.
Without a word of doubt anyone who is considering going down the bankruptcy road should contact an experienced bankruptcy attorney. The bankruptcy laws are complex and varied and everyone should be fully informed of their rights.