Filing personal bankruptcy is a great solution for consumers who are looking to reduce debts. However, just like any other major financial decision, the decision to file for bankruptcy should not be taken lightly. It is important that consumers understand that there are benefits and disadvantages to filing bankruptcy.
Effects Are Long Term
One of the first things that you should understand if you are considering filing personal bankruptcy is that the effects of the filing are not short term. The repercussions can affect your career and your credit score for up to 10 years. It will also affect your financial situation if you plan to purchase a home, car or apply for other types of financing such as a personal loan.
There is more than one type of bankruptcy. And, consumers who are filing personal bankruptcy should know the different types. In fact, there may be better alternatives for your particular situation that will allow you to protect your assets.
Consult With an Attorney
Before you decide to file, you should consult with a reputable bankruptcy attorney. The attorney will know what action you should take. In addition, the attorney will assess your income and debt. And he or she will advise you on the action you should take while taking into consideration priorities and expenses.
If alternatives are suggested, the attorney may suggest that you try debt counseling or debt negotiation with your creditors. The attorney may suggest that you negotiate any unsecured debts that have higher interest rates. The attorney may even represent you during these negotiations. A bankruptcy attorney can help you reduce the amount of debt you have even if you do not file for bankruptcy.
Filing for Bankruptcy
If the lawyer decides that bankruptcy is the only option for you, a means test will be conducted to determine if you can file for Chapter 7. Chapter 7 bankruptcy filings allow consumers to have most of their debts written off, but their assets will be liquidated. If you file for Chapter 13, you may not lose your assets, but you will have to enter into approved repayment plans with your creditors.
Filing personal bankruptcy is not the only choice you have when you are having financial difficulties. Speak with an attorney to explore your choices before you make a decision.
Get more information about filing for personal bankruptcy by contacting us for a free consultation.