5 Things To Know About Filing Chapter 7 Bankruptcy

The level of financial distress in America is at an all-time high, leaving potential large amounts of bad debt expenses in the coming years. It’s even possible that you’re amongst those finding it difficult to pay their bills on a monthly basis. Everyone loves to meet up with financial payments, but not all can. Proper financial planning becomes paramount.

There are multiple options out there. And to make the most ideal choice, you need to first examine the options you have, and properly acquaint yourself with those options. Some things that you’ll definitely learn in this article include:

1.       Have a proper understanding of bankruptcy

2.       Know all the alternatives to bankruptcy

3.       Acquaint yourself with the free resources that are available to help you with your choices

4.       Things I would have done if I were in your shoes

 

1) What is Bankruptcy?

Bankruptcy is legal creation for getting relief on your debt. Most debts that are forgiven are personal loans, which are; medical bills, payday loans, credit cards, etc. The bankruptcy court will evaluate your expenses to ascertain that you can pay your debt if you’re filing Chapter 13 bankruptcy.

2) How much does it cost to get a bankruptcy discharge?

One of the most common questions is how much does it cost to file Chapter 7. Let’s discuss that here.

It’s possible that you’re worried about being able to afford a bankruptcy discharge since you find it difficult to pay your bills. You’re not alone in this. A good majority of bankruptcy attorneys have payment plans to help people cope with payments.

In filing for a bankruptcy discharge, some of your major costs will entail an attorney fee and fee charged by the bankruptcy court. This filing fee is usually about $350, while the amount charged by the attorney varies significantly. 

3) How Many Types of Bankruptcy are there?

The most sort after bankruptcies are Chapter 7, Chapter 11, and Chapter 13 bankruptcy; these are consumer bankruptcy. If you’re willing to apply for a bankruptcy discharge, then it’s imperative that you understand the differences between these types of bankruptcy.

4) How Bankruptcy Works

As a consumer, your main choice of bankruptcy is Chapter 7 or 13 bankruptcy. These two bankruptcy types are the two most important in the United States.

Some features of Chapter 7 bankruptcy include the following;

1.       Consumers get a bankruptcy discharge fast

2.       Chapter 7 can be cheap.

3.       It’s possible to lose one's assets if those assets are not exempted by law.

4.       Must fit the income, state, and household qualification

5.       It should be on your Credit Report for a 10 year period

 

Some features of Chapter 13 bankruptcy include the following:

1.       They are often slower and they can discharge in just 3 or 5 years

2.       It is more expensive than Chapter 7 bankruptcy

3.       Debtors can keep their assets, even without an exemption

4.       It requires a monthly payment

5.       You don’t have to qualify provided that your debt is within the acceptable limit

6.       Details of this bankruptcy will remain on your credit report for 7 years

The process for applying for a discharge is pretty straightforward for most people. It entails consulting with a bankruptcy attorney, taking an online course, submitting necessary documents, attending meetings, and getting a bankruptcy discharge on certificates. That said, some people decide to file Chapter 7 bankruptcy without an attorney.


5) Alternatives to Chapter 7 Bankruptcy

There are numerous alternatives to filing for a bankruptcy discharge. We’ll touch on some of those alternatives below. However, let’s first educate you on a free tool that can help you analyze whether filing for a bankruptcy discharge is a smart move or not. On bankruptcy, decision portals are calculators for estimating the cost of filing for bankruptcy based on your location.

As mentioned earlier, it’s highly essential that you acquaint yourself with your option, and what those options will cost you. This way, you can make the most informed decisions.

Let’s talk about the bankruptcy alternatives you can exploit:

Ask your creditors for help

If you’d rather opt for an option that’ll have the most minimal effect on your credit score; this is one you should opt for. However, if your creditors rule out the possibility of any negotiation, then it’s best to opt for other options on the list.

It shouldn’t be a surprise to you if creditors refuse to negotiate as they’ll rather have you stick to the current payment plan. This plan allows them to get the maximum interest possible on the debt.

Debt Payoff Planning

Your debt payoff planning should be done vis-à-vis your budget. Debt payoff works by arranging your debt according to the debt payoff strategy to use; this strategy may include avalanche, snowball, or debt savvy method.

Debt management

These are companies that specialize in negotiating debtors' interest rates. This is the most ideal option for individuals with high interest-rate debts. However, it’s best to contact the credit card companies yourself if it’s a debt you can’t afford. Who knows, they may have a policy that you find favorable enough to use.

Debt Settlement

Debt settlement companies are those that help to negotiate the total debt sum owed. This method usually leads to more savings than the debt management method.

Each of these bankruptcy alternatives has its pros and cons. Thus, you should research their pros and cons before giving them a shot.

What About Your Filing Decision?

The peculiarity of each debt situation prevents me from making a blanket statement on which option is the best. Having said that, I’ll advise that you use Ascend’s bankruptcy calculator to estimate the pros, cons, and costs of each method.


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