5 Things You Should Know Before Filing for Bankruptcy

Financial strains are one of the top reasons people experience anxiety, depression, and stress. When you’re in debt, your life just isn’t the same. Debt can make certain things difficult or less enjoyable. If your debt is massive enough, you may not be able to qualify for decent housing, leasing a car, or other obligations regarding your credit. If you feel like you are drowning in debt, you may want to consider filing for bankruptcy. If you are considering filing for bankruptcy for debt relief, the Law Offices of John E. Mufson has provided 5 things you need to know before your file for bankruptcy.

Understanding the Different Types of Bankruptcy 

Unless you’re an expert in accounting or the law, debt solutions may seem nonexistent. Fortunately, the Law Offices of John E. Mufson are experts in the law and have both knowledge and experience with bankruptcy laws and will help you navigate through them and understand your options. When filing for personal bankruptcy claims, there are two main options: Chapter 7 bankruptcy and Chapter 13 bankruptcy.  

Chapter 7 Bankruptcy, commonly known as liquidation bankruptcy, means you unable to make minimum payments on your debts to become debt-free. This form of bankruptcy requires the liquidation of all assets to settle debts, i.e. the name. In addition to liquidating all your assets, filing for Chapter 7 Bankruptcy allows individuals to halt harassing phone calls and foreclosure proceedings, forcing creditors to accept the terms of your settlement. Once a discharge has been issued by the courts, you then may begin focusing on rebuilding your credit. However, if your debts exceed a certain amount or you belong to a higher tax bracket, you may not qualify. Contact the Law Offices of John E. Mufson for more information today!  

Chapter 13 Bankruptcy a form of consolidation and repayment plan, it is considered the reorganization option for bankruptcy. With a more affordable three to five-year payment schedule, this bankruptcy option offers debt relief without completely surrendering all that you own. Similar to filing for Chapter 7 Bankruptcy, this option stops harassing phone calls and threats of repossession or foreclosure. Additionally, making your payments regularly and on time helps to build your credit as you pay off the debts. Once you’ve successfully paid off the agreed-upon amount, your remaining debts will be dismissed!

The Consequences of Bankruptcy 

Although bankruptcy sounds like a get out of jail free card, it’s not. If you decide to file for a Chapter 7 Bankruptcy, all your good credit will be wiped along with your bad credit. Furthermore, filing for bankruptcy also stays on your credit history for up to 10 years, which may impact things like purchasing a home or leasing a car. Having a bankruptcy on your credit history may also affect your chances of approval and interest rates on loans, the ability to find an apartment, and other financial transactions. 

Bankruptcy Doesn’t Cover All Debts

When you file for bankruptcy, not all debts may be dismissed. For example, child support will still be required to be paid, even if you file for bankruptcy. Seeking other debt programs in Delray Beach can help you manage these expenses. The Law Offices of John E. Mufson can guide you through your available options. 

Stays on Public Records

If you decide to file for bankruptcy, you need to be aware that it will be available through public records. The general public will have access to your record and see when and how many times you have filed for bankruptcy. If this concerns you, you may want to consider other debt solutions available to you. 

Creditors Can Challenge Your Request 

Filing bankruptcy is not a guaranteed solution. Depending on how much you owe, lienholders or other lenders can challenge your bankruptcy. You need to have an experienced bankruptcy lawyer in Delray Beach can help you navigate the court process should a company decide to challenge your filing. At the Law Offices of John E. Mufson, we are well versed in bankruptcy law and fully capable of helping you make the best decision for your specific situation. If any of these points raised any concern to you or you related to any of them, please contact our office today by calling (561) 272-1003.