Can You File For Bankruptcy Without An Attorney – If your debts have become unmanageable or you are facing foreclosure on your home, you may be thinking about declaring bankruptcy. While bankruptcy is the only option for some people, it also has serious consequences that you should consider before making any decision. For example, a bankruptcy can stay on your credit report for seven or 10 years, depending on the type of bankruptcy. This can make it difficult to get a credit card, car loan or mortgage in the future. It can also mean higher insurance rates and affect your ability to get a job or rent an apartment. This article explains how bankruptcy works and provides some alternatives to bankruptcy.
Bankruptcy is generally considered a last resort for those who are deeply in debt and unable to pay their bills. Before filing for bankruptcy, there are alternatives to explore. They cost less than bankruptcy and do less damage to your credit record.
Can You File For Bankruptcy Without An Attorney
For example, find out if your lenders are willing to negotiate. Rather than wait for a bankruptcy settlement — and risk nothing — some creditors will agree to accept reduced payments over a longer period of time.
How To File
When it comes to home mortgages, call your loan servicer to see what options are available to you. Some lenders offer forbearance (deferring payments for a period of time), repayment plans (such as smaller payments spread out over a longer period of time), or loan modification programs (for example, lowering your interest rate on the remaining loan).
Even the Internal Revenue Service is often willing to negotiate. If you owe taxes, you may be eligible for an offer in compromise, in which the IRS will accept a lower amount. The IRS also offers payment plans, allowing eligible taxpayers to pay what they owe over time.
If you’ve decided to file for bankruptcy, your first step is usually to consult an attorney. While it’s possible to file without one, “because bankruptcy has long-term financial and legal consequences, it is strongly recommended that you seek the advice of a qualified attorney,” the Administrative Office of the U.S. Courts states on its website. (Bankruptcy is governed by federal law, and although some rules differ from state to state, cases are handled by federal bankruptcy courts.)
Before you file, you must attend a counseling session with a credit counseling agency approved by the Department of Justice’s American Trustee Program. A counselor should assess your personal financial situation, describe your alternatives to bankruptcy, and help you develop a budget plan. Consultation is free if unable to pay; Otherwise, it costs about $50, according to the Federal Trade Commission.
What Experts Say To Do Before, During And After Filing For Bankruptcy
If you still want to proceed, your attorney can advise you on which type of bankruptcy is best for your situation.
In the case of individuals, as opposed to businesses, there are two common forms of bankruptcy: Chapter 7 and Chapter 13. Here’s a brief explanation of how each type works:
Chapter 7. This type of bankruptcy removes your assets to pay your creditors. Certain assets, including equity in your home and automobile, personal items, clothing, tools you need for your job, pensions, Social Security and other public benefits are generally exempt, meaning you can keep them.
But your remaining, non-exempt assets will be sold by a bankruptcy court-appointed trustee. Non-exempt assets include real estate (other than your primary residence), recreational vehicles, boats, a second car or truck, collectibles or other valuables, bank accounts and investment accounts.
What Is The Difference Between Chapter 7 And Chapter 13 Bankruptcy?
At the end of the process, most of your debts will be discharged and you will have no obligation to repay them. However, some debts such as student loans, child support and taxes cannot be discharged. Chapter 7 is typically chosen by individuals with low incomes and few assets. Your eligibility for the same is also subject to a means test, as explained below.
In this type of bankruptcy, you are allowed to keep your assets, but must agree to repay your debts within a specified period of three to five years. The trustee collects your payments and distributes them to creditors. Chapter 13 bankruptcy is typically chosen by individuals who want to keep non-exempt property intact or buy time against foreclosures or foreclosures.
Whether to file for Chapter 7 or Chapter 13 is not your decision. Courts also impose a means test to determine whether you qualify for Chapter 7. This test first compares your average income for the previous six months with the average income of your family in your state; If you earn less than the median, you should qualify for Chapter 7.
Even if your income is above average, you may still qualify after deducting certain allowable expenses. But if the calculation shows that you have enough disposable income to begin repaying your debt — rather than simply wiping the slate clean — the court may decide that Chapter 13 is your only option. Complete this Form 122A-2 to help determine your eligibility.
Should I File A Chapter 13 Bankruptcy Case Or A Chapter 7 Bankruptcy Case By Tony Turner Bankruptcy Lawyer
When you file for bankruptcy, you will be asked to provide the court with a list of all the money you owe. Your loans are of two types:
A bankruptcy court considers a secured debt a higher priority because failure to pay it can entitle the debtor to the property that serves as collateral.
Once all the essential information is filed with the court, the court appoints a trustee whose job it is to ensure that your secured loan is repaid within a certain period of time. At that point, the court issues an automatic injunction that prevents creditors from seizing assets through foreclosure or foreclosure.
When the bankruptcy court discharges you, you are released from your responsibility to repay the listed debts. This means that creditors have no legal claim against the debts, so they cannot pursue any collection action, take any legal action or contact you in any way.
How To File Bankruptcy Online Without A Lawyer [and Save] Story
The court will send a notice to your creditors that the debts have been discharged. A copy will be sent to your attorney and the American Trustee Program at the Department of Justice. Any debtor who tries to collect the debt after receiving the discharge notice may be penalized.
For a Chapter 7 bankruptcy, the discharge is usually granted within four to six months of the bankruptcy filing. A discharge under a Chapter 13 bankruptcy is granted after a payment plan is completed, usually three to five years after the bankruptcy is filed.
Once your debts are discharged by the court, those creditors cannot collect them or take other legal action against you.
As mentioned above, bankruptcy can stay on your credit report for seven years (in the case of a Chapter 13) or 10 years (in the case of a Chapter 7). This can make it difficult to get additional credit, such as a bank loan or a regular credit card. However, the effect of bankruptcy on your credit score will diminish over time, and if you show that you are using credit responsibly, your score will gradually improve.
How To Know When To File Bankruptcy: Tips And Considerations
One tool to do that is a secured credit card, where you make a deposit with the issuing bank, which becomes your line of credit. By using that card wisely and making timely payments, you can start building a new credit history. After making timely payments, you may qualify for a regular, unsecured credit card.
It can take time to rebuild your credit and get your financial life back on track. But bankruptcy—if you have no other viable choice—isn’t the end of the world.
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