Will Bankruptcy Help Me?
Whether bankruptcy will help you depends on your financial situation and what you hope to accomplish by declaring bankruptcy. If you have a large amount of unsecured debt, want to prevent an immediate foreclosure or have judgments or liens that you cannot afford to pay, bankruptcy may be a solution for your financial difficulties.
Other People Are Reading
-
Stop Foreclosure
-
If you are facing foreclosure, filing bankruptcy will place an automatic stay on your creditors, preventing your lender from foreclosing on your property. Note that your lender can request that the judge lift the stay and so that the lender can proceed with foreclosure; but if not, the stay provides you time to attempt to work out a solution with your lender. Depending on the home exemption in your state, the amount of equity in your home and if you are current on your payments, you may be able to reaffirm your mortgage and continue paying the debt when you file Chapter 7 bankruptcy. Chapter 13 bankruptcy provides you with the opportunity to catch up any missed payments and keep your home if you continue making your payments.
Debts That Bankruptcy Cannot Discharge
-
If your debts are from missed child or spousal support payments, debts arising from fines or court-ordered restitution or some tax liabilities, filing bankruptcy will not help you. Bankruptcy does not discharge these types of debts. Other debts that bankruptcy may not discharge include credit card debt that you have amassed after fraudulently obtaining the account and debts that you obtained after providing a false financial statement. Bankruptcy will not discharge student loans unless you can prove an undue hardship, such as a disability.
-
Time Limits
-
If you filed Chapter 7 bankruptcy within the last eight years or if it has been less than two years since a prior Chapter 13 discharge, bankruptcy will not help you because you are ineligible to file again. The government instituted filing restrictions to prevent debtors from taking advantage of the ability to erase debt through bankruptcy. While the only time restriction for filing Chapter 13 is the discharge of a previous filing, you should be sure that filing now is best because you may not be able to file again for several years.
Conclusion
-
You should use bankruptcy only if you have no other way out of your financial difficulty. Filing will have adverse effects on your credit report for up to 10 years; but if you cannot make your payments and are facing foreclosure, damaging items are already on your report. One requirement for filing bankruptcy is for debtors to go through a credit-counseling course that will look at your debts and income and help you decide if bankruptcy is indeed your best course of action.
-
