Federal laws designate specific rules that must be followed to be able to file bankruptcy. Although these rules are a large part of the criteria you must meet, there are also state laws that add more criteria. Bankruptcies are not to be entered into lightly, so it’s important that you understand the differences and file under the appropriate chapter that applies to your specific circumstances.
However, there is still a good side on bankruptcy. This is one way of cutting off the unending phone calls and demand lenders from lending companies. Collection agents would no longer have to waste their time going after you once you have declared bankruptcy. But you also have to put in mind that the effects of the said option would rely on its kind.
When you talk of Chapter 13 bankruptcy or known as reorganization, this will allow you to take hold of some of your assets such as car or the house or you may either lose them. This option will allow you to settle your pass due accounts in a given period of time such as 3 or 5 years instead of giving up your house.
However, this doesn’t make the actual process any less stressful, and in 2005 the government brought in the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it even more stressful to claim bankruptcy.
There is also a chapter that is specifically designated for farmers and fishermen who use these means to support their family. In order to qualify for this chapter as a business, your company must be owned by a single family unit. For individuals, you must verify your occupation. Your total debt must not exceed certain limits and the ability to repay debts must be proven.
Bankruptcy can really have terrible effects to every homeowner. Regardless of the kind of bankruptcy filed it still has alarming results on your credit score. It is a given fact that the credit standing plays a vital role in every credit transaction.
If you can’t qualify for any chapter, you have other options. You can try a debt consolidation that gives you one payment you can afford. You can also contact your creditors to negotiate better payment terms. Both of these options can help you repay your debt in a manner that you can afford.
Filing bankruptcy can be a confusing and long process if you don’t know what you’re doing. It is important to research the different bankruptcies to see which ones are applicable to you. You should talk with a specialized lawyer to find out exactly what you need to do.
Harris Smith is a writer on personal finance education. Her article tackles the pros and cons of home equity line of credit