Bankruptcy is a legal proceeding in which people who cannot pay their bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law and all bankruptcy cases are handled in federal court. In most cases, filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
Bankruptcy is a way to potentially get out of your debts. Unfortunately, it leaves a long lasting scar, and comes at a high price - financially, emotionally, and socially. It is a long and painful process and the repercussions can last for over a decade.
Bankruptcy is not an easy or even quick fix. It is a serious decision with serious consequences. If you are considering bankruptcy, you should contact a lawyer to discuss the details of this option.
Please keep these important facts in mind before filing for Bankruptcy:
- Both Chapter 7 and Chapter 13 bankruptcy represent a severe negative impact on your credit for 7-10 years and can cost up to $2,500 to file.
- May have a negative impact on your employment status or furture employment.
- In a Chapter 13 filing, you may end up paying 75 - 100% of your debt back with little payment relief. Completion rates for this option are low for this reason.
- Chapter 7 is much more difficult to qualify for under the new bankruptcy laws.
- May result in higher interest rates on future loans.
- Carries a negative stigma, mental stress, and other burdens.
- Bankruptcy should be a last resort.
