The Most Important Things to Know Before Filing for Bankruptcy

Money seems to rule the world, but you shouldn’t let it rule over you. When you’re suffering from a financial strain such as debt, your life just feels like it can’t be lived to the fullest. Not only does debt feel like a looming rain cloud, but it also can stop you from qualifying for decent housing, leasing a car, or other necessities. 


Before you decide to file 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.


Knowing the Difference in Types of Bankruptcy 

Unless you’re an expert in accounting or law, debt solutions may seem nonexistent. However, with the help of the Law Offices of John E. Mufson, you can gain a greater understanding of the options you have for debt relief. 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 this confusing time. When filing for personal bankruptcy claims, there are two main options: Chapter 7 bankruptcy and Chapter 13 bankruptcy.  


Chapter 7 Bankruptcy, commonly referred to 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, which is why it’s called liquidation bankruptcy. When an individual files for Chapter 7 Bankruptcy, the harassing phone calls, and foreclosure proceedings stop, and the creditors must 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. Moving onto chapter 13 Bankruptcy…  


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!


Bankruptcy Doesn’t Cover All Debts

A common misconception is that bankruptcy dismisses all your debts. For instance, if you pay child support, it will still be required to be paid, despite filing for bankruptcy. Seeking other debt programs in Delray Beach can help you manage these expenses and learn more about your options.


Stays on the Record Books

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. Filing for bankruptcy can stay 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, ability to find an apartment, and other financial transactions. 


Mufson Law Can Help!

One should be aware that filing for bankruptcy is not a guaranteed solution. Depending on how much you owe, lienholders or other lenders can challenge your bankruptcy correct. You need to have an experienced bankruptcy lawyer in Delray Beach who 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.