Bankruptcy, a word that makes most people cringe. Images of ruthless debt collectors, bank notices, and soaring credit scores come to mind. But sometimes filing for bankruptcy may become necessary in certain cases, and if done correctly it can serve as a fresh start. Before any decision is made, a person needs to be informed of what the process actually entails.
Before filing bankruptcy, Heyward residents should know that subtle differences exist between bankruptcy cases, but they generally consist of the same general steps and procedures.
Types of Bankruptcy
There are two types of bankruptcy, chapter 7 and chapter 13. Chapter 7 bankruptcy, often referred to as a straight bankruptcy, results in all of the filers possessions (non-exempt property) being liquidated and used to pay off creditors.
Chapter 13 bankruptcy, on the other hand, is used by people who only want to pay part of their debts, but are unable to at the current time. This type of procedure is often referred to as reorganization bankruptcy, and is appealing to people with lots of non-exempt property.
The Results of Bankruptcy
Filing Bankruptcy has many affects. Firstly, it stops wage garnishments and harassment from debt collectors. It discharges all debts, relieving any legal obligation to pay most or all of your debts. Although, it is important to remember the bankruptcy will not eliminate property liens. Filing also prevents more of your possessions from being confiscated, such as cars or boats.
What Bankruptcy Won’t Do
Although the ramifications of bankruptcy are many fold, there a few areas of your financial life that bankruptcy will not affect.
* It will not eliminate student loans
* It generally won’t prevent you from getting a credit card, in fact, you may be able to keep your old credit card.
* Child Support, Alimony, criminal fines, and recent taxes.
* Debts not listed on the bankruptcy petition
Although bankruptcy undoubtedly has negative consequences, sometimes they’re necessary. If a bankruptcy is done correctly, it can actually be a gateway to a fresh start. Residents of Heyward should do thorough research and consult with a bankruptcy lawyer before filing. It’s important to explore all possible alternatives before proceeding, and to weigh your options carefully.