Declaring bankruptcy is a big decision. It can even be difficult to figure out what to take into consideration when making the decision. So we’ve put together six things you should definitely consider before declaring bankruptcy!
#1 What do I want the result to be?
There are different types of bankruptcy for different financial situations. In this article, we explained the basic differences between the most used types which can be summarized by asking, “Do you have major assets you want to keep or do you want to start over completely? Knowing what you want for your future will help you decide what to do when declaring bankruptcy.
#2 What kind of bankruptcy should I file?
Once you decide what you want the result of your bankruptcy to be, you can speak with your lawyer about which type of bankruptcy you should file. Generally, individuals will file either Chapter 7 or Chapter 13 bankruptcy, and very rarely Chapter 11. Chapter 7 will wipe out almost all debt by selling your assets, but is only available to people below a certain income level. Alternatively, Chapter 13 will allow you to keep your assets by repaying part or all of your debt using a structured financial plan. Speak to an attorney to go over your options when declaring bankruptcy.
#3 How will this affect my credit?
After declaring bankruptcy, it will show up on your credit history for about 10 years. But it’s no longer the black mark it has been in the past. Plus, the older a bankruptcy is the less it will affect your ability to get credit. And chances are your credit was not great as a result of your overdue debt, so declaring bankruptcy could actually improve your situation.
#4 Will other people find out?
After declaring bankruptcy, your financial information is no longer private. It is extremely rare that a personal bankruptcy case is sealed. A Motion to Seal is usually only granted if the personal safety of the applicant, such as in cases of domestic abuse or stalking, is at risk. Except in these circumstances, your information will become part of the public record and can be accessed by anyone through PACER. Realistically, though, unless you are a public figure, no one will be interested in your bankruptcy!
#5 How much will it cost me to file?
Declaring bankruptcy can cost quite a bit, but our attorneys will work with you on a payment plan (shameless plug). You’ll need to pay filing fees, education fees and legal fees. In Chapter 13, you can include the bankruptcy costs in your three to five year repayment plan, but there is no such option in Chapter 7. However, if you qualify, you may be able to receive free or low-cost legal help in all three areas.
#6 Should I hire a lawyer?
Absolutely. You may have seen advertisements for non-lawyers who do bankruptcy assistance, but without proper legal representation, you may make an error and end up in bigger trouble. You may be considering declaring bankruptcy on your own, and you should be able to find an organization in your area that may be able to help you. But unless your financial situation is extremely simple, a lawyer is always your best bet.
If you are considering declaring bankruptcy, contact our bankruptcy attorneys here for a free consultation.