Are you thinking about filing for bankruptcy? If so, you will be in good company. The presidents Thomas Jefferson, Abraham Lincoln and Ulysses S. Grant all went bankrupt during their lives. So did Henry Ford, candy-maker Milton Hershey, TV personality Larry King and ketchup-maker H. J. Heinz. Even the famous comic book creator Stan Lee and actor Burt Reynolds filed for bankruptcy.
You probably have questions about bankruptcy and if you’re typical, here are the five that may be foremost on your mind.
How much does a chapter 7 bankruptcy cost?
Bankruptcy costs vary from client to client. It generally costs about $300 just to file for a Chapter 7 bankruptcy and then there are legal fees on top of this. I have seen ads from lawyers offering to do bankruptcies for $500 or less. However, these may be “come ons” so it pays to talk with several attorneys to make sure you understand their total costs and which one might charge the least.
What is the difference between a Chapter 7 and a chapter 13 bankruptcy?
A chapter 7 bankruptcy is considered to be a liquidation bankruptcy. You give up your assets above certain limits and most of your debts are then discharged or eliminated. Some of the debts that cannot be discharged in a chapter 7 bankruptcy include student loan debts, alimony and child support and back taxes. In comparison, a chapter 13 bankruptcy is really a debt-restructuring plan where you make affordable monthly payments to the court for three to five years. In return, you get to keep your property and at the end of your plan, you get to discharge any unpaid debts. As a general rule, a chapter 13 bankruptcy is best for people who have higher than average salaries or if you have a lot of equity in your home that you want to keep.
Could I file for bankruptcy myself?
Yes, you could file for bankruptcy yourself. However, this might not be the wisest of choices. The bankruptcy code is lengthy, complicated and difficult for a layman to understand. Navigating through a bankruptcy case requires experience and skills you may not have. An experienced attorney knows how to streamline the process, get all the necessary papers filed when required and steer you through your bankruptcy in six months or less.
If I file for bankruptcy, can I keep my house and car?
While the rules of a chapter 7 bankruptcy vary from state to state, the net/net is that you should be able to keep $15,000 to $50,000 in equity in your house (depending on the state where you live) and $3,000 of equity in your automobile or $6,000 if you’re filing jointly with your spouse. The way you determine how much equity you have in an automobile is by subtracting what you all on the vehicle from its value. For example if you have an automobile valued at $6,000 on which you owe $4,000, you would have $2,000 in equity.
How will a bankruptcy affect my credit score?
Declaring bankruptcy will definitely put a stain on your credit record that will stay there for 10 years. You probably won’t be able to get a new mortgage or buy an automobile during the first few years though you will probably be inundated with offers for high-interest credit cards. Bankruptcies are public records so a potential employer would be able to see that you have had one. This could keep you from getting a job as some employers are very hesitant about hiring a person who has had a bankruptcy. You could even have a problem renting a house or apartment for the same reason.
Debt settlement could be better
Contracting with us to settle your debts could be a better solution than filing a Chapter 7 bankruptcy. This is because debt settlement does not have as negative an impact on your credit record as a bankruptcy. In addition, it’s the only way that you can get both your balances and interest rates reduced to get out of debt in 24 to 48 months. Plus, it’s the right thing to do versus stiffing your creditors via a bankruptcy. For more information about how debt settlement works and could help you, fill in the form on this page or call our toll-free number.