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What To Know Before Filing Bankruptcy

30 March 2021 by Jo Rodriquez

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Bankruptcy is something that most of us try to avoid at all costs. Declaring bankruptcy can feel like a financial failure. However, sometimes life events make ti to where bankruptcy is the best option financially. Things like medical debt, accidents, extended periods without a job, being irresponsible with money, and other situations can make filing for bankruptcy necessary. While it may not be something you want to do, it's often the best way to start over with a clean slate. Here's what to know before filing bankruptcy.

There Are Different Types of Bankruptcy

The first thing that you should know is that bankruptcy isn't just one size fits all. There are different types of bankruptcy and it's important to determine which one will work best for your needs. When it comes to filing as an individual, you will likely be filing for Chapter 7 or Chapter 13 bankruptcy. With a Chapter 7 bankruptcy, some of your property will be sold to cover your debts, but some pieces of property may be exempt. Once this is settled, your debts are discharged. With Chapter 13, a three to five-year repayment plan is decided on for some of your debts. Once the time period has passed, the remainder of your debt is forgiven.

An Attorney Can Help

Determining which type of bankruptcy to file for can be a challenge. Also when you file for bankruptcy, there's no guarantee that you will be successful. This is where having an attorney can come in handy. A bankruptcy attorney will increase your odds of filing successfully in addition to determining which bankruptcy filing is right for your needs. The cost of bankruptcy attorney services can vary but typically you can expect to pay between $500 and $3,500 for Chapter 7 and between $1,500 and $6,000 for Chapter 13.

How Long it Stays on Your Credit Report

If you feel that your current debt is overwhelming and that there's no way to get out of the situation you are in, it's important to contact a bankruptcy attorney as soon as possible. While filing bankruptcy can help your financial health greatly in the long-term, it's important to note how long you will feel the impact of this decision. A chapter 7 bankruptcy will stay on your credit report for 10 years while all other types of bankruptcy stick around for 7 years. 

If you are considering filing for bankruptcy, there are a few things you should know. First, you should look into what type of bankruptcy is right for your needs. A bankruptcy attorney can be invaluable during this process by helping you determine which type of filling is right for you and helping with the paperwork. While it's likely the right decision, it's important to take into account how long bankruptcy stays on your credit report. Meet with a company like McCool & McCool for assistance.

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