When bills pile up and money is tight, many people start to wonder how bankruptcy works and how to get help. But the right time to ask these questions is long before things get desperate.
Money struggles happen to everyone at some point in life. For people who have an on-call "family lawyer" or participate in a legal plan, it's easy to find answers to questions about bankruptcy without adding to your debt.
For others, it's not quite so easy, though there's a lot of information available online. Knowing some basics about bankruptcy, and what the process entails, is a good place to start.
The decision about whether to file bankruptcy depends heavily on your financial situation. Once you've gotten advice on the question of "should I file?" then the next issue will be what kind of bankruptcy to choose.
For individual bankruptcy there are two options, Chapter 7 and Chapter 13. But many people who file don't have a choice.
Chapter 7 bankruptcy is only available to people who qualify. If your income is too high, it won't be an option.
The type of filing you choose will have consequences for how your bankruptcy is handled by the court.
Chapter 7 wipes out certain debts but requires you to give up some property to pay creditors. Chapter 13 lets you keep your property but you have to figure out a fair repayment plan.
What to Expect After Filing for Bankruptcy
After filing, expect some serious turmoil in your personal life. You have to be honest and open about your financial life so the court can help you start fresh. That can be painful but for many the end result is worth it.
It's also likely that you'll feel the effects of bankruptcy for a while. It affects your credit and may put limits on how you spend money in the years to come.
Because bankruptcy requires so much personal information, it also means the filings can require a lot of paperwork. While it's helpful to have an attorney take care of your case, there are alternatives when that's not financially feasible.
Where to Find Help
As mentioned above, legal plans like LegalStreet include bankruptcy on a list of included services, for an average of $12.50 per month. But not all plans are created equal.
When considering your options, look for plans that provide all necessary filing materials together, offer you the option of filing for Chapter 7 or Chapter 13, and allow you to do it yourself at a low cost rather than relying on an attorney that you can't afford.
If you're a member of a plan like LegalStreet, you'll be able to call a local lawyer and ask questions before deciding whether to file. But beware of restrictions that limit how often or how soon you can start contacting an attorney.
Getting legal help and filing for bankruptcy don't have to be mutually exclusive events. Knowing some basics about the law, and what kind of help you're looking for, will lead you in the right direction.
Disclosure: LegalStreet and FindLaw.com are owned by the same company.
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