What factors to be considered before filing for bankruptcy?

by Recovery Law Group Recovery Law Group

Are your bills mounting as you are out of work and locked at home due to COVID-19 pandemic? Are you considering filing for bankruptcy as it might be your only way out of this financial mess? If so, you have got companies in thousands. However, there are some factors that you must understand before you take this giant step. Bankruptcy is not going to solve all your financial problems. You will require professional guidance and full-time assistance, because bankruptcy is a prolonged process. There are key considerations, too. Thus, to help you determine the most effective and practical path for you, here are 4 things you must understand before filing for bankruptcy.

There are usually two types of bankruptcy

If you choose bankruptcy, you must decide which type would be the best for you based on your individual situation – Chapter 7 bankruptcy or Chapter 13 bankruptcy. Most bankruptcies for common citizens are filed under these two chapters. However, choosing the right type to file for is surely a difficult task, thus, you might want to work with a seasoned bankruptcy attorney to help you make the right move.

Consider other available options before filing for bankruptcy

Before you file for bankruptcy, you must consider other available alternatives that are never very as drastic. Credit counseling, for instance, may be an ideal decision. However, most fail to follow through credit counseling. A debt management and budget plan only work, if you are determined enough to stick with them. Nearly 50% of those who choose debt management plan drop out, and only few enroll in debt management successfully. This is why, attorneys at Recovery Law Group advise going for bankruptcy filing, but under full-time guidance and assistance.

Never go on a spending spree with your retirement account

Even if it seems tempting to do so, never go on racking up new debt while you are on 70- to 90-day period before filing bankruptcy. Your lenders might raise objection to your request for bankruptcy discharge based on bankruptcy fraud. Do not drain the retirement savings before filing for bankruptcy, either. Generally, retirement funds are secured in bankruptcy. In fact, consider legal consultation before even touching your retirement fund to pay bills, as filing for bankruptcy might potentially eliminate much of that debt anyway.

Bankruptcy will not eliminate all your debts

You will not necessarily be able to brush off all your financial liabilities in bankruptcy. For instance, Congress has categorized these following types of debts as non-dischargeable – child support, student loans and taxes. However, there might be an exemption with student loans if only you can prove that there’s been an unnecessary hardship.

In bankruptcy, protected lenders preserve the right to collateral and, therefore, might still take your property connected to the loan. Unsecured debt, on the other hand, might be eliminated in bankruptcy. There is no collateral that your lender might grab on to repossess.

For more information and deliberations, contact bankruptcy attorneys at Recovery Law Group here: 888-297-6203.

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Created on Mar 24th 2022 02:54. Viewed 198 times.


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