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If you can’t pay your debts because they’ve become unmanageable, to get a fresh financial start, you may consider declaring bankruptcy. But, before making any drastic decisions, you should know what goes along with a move such as this. There are pros and cons to filing for bankruptcy.

Right about now, you may be thinking, “So, let’s say I declare bankruptcy. Then what happens?” Bankruptcy is something you should first discuss with a professional. That said, the following will include some straight-up facts about bankruptcy protection and a comparison between Chapter 7 and Chapter 13 bankruptcy.

What Happens If I Declare Bankruptcy?

The following are some important points regarding bankruptcy that you should know before you consider filing:

  • If you find you are unable to pay your bills and need relief from debt, the legal process for doing so is referred to as bankruptcy. There are a couple of kinds: Chapter 13 and Chapter 7.
  • Depending on the type of bankruptcy, it will remain on your credit report for 10 years or for seven years. In the future, that might make it hard to obtain a mortgage, car loan, credit card, etc.
  • If bankruptcy doesn’t seem like the right move for you at this time, there may be another solution such as working out a payment plan with your creditors. Negotiations can be done personally or through another company.

You may discuss a loan modification with a bank if you currently have a loan out. An offer in compromise or some type of negotiation may be possible with the IRS if you are severely in debt with them.

Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 13: Here, over a specified period, you must repay your debts. But you keep your assets with Chapter 13.

  • Over a period of 3 to 5 years, you must agree to repay your debts with a plan put forth when you file for Chapter 13. Payments are distributed to your creditors after being collected by a trustee. Chapter 13 bankruptcy is often chosen by those who wish to buy time against property seizures or foreclosures, or by those who prefer to retain non-exempt property.

Chapter 7: In order to pay your creditors, you will need to sell off as many assets as possible to pursue Chapter 7 bankruptcy. Assets that are exempt include the following:

  • Social Security
  • Pensions
  • Employment necessary tools
  • Clothing
  • Personal items
  • Part of the equity in your automobile and in your home
  • Various public benefits

Now that you know what happens when you file for bankruptcy, it’s time to make the decision whether or not to move forward. For advice, you may want to talk to a professional…

Trying to Decide Whether or Not to File for Bankruptcy? Talk to The Debt Defenders by Ciment Law Firm, PLLC

If you still have questions as to whether or not bankruptcy is the right move for you at this time, confer with The Debt Defenders by Ciment Law Firm, PLLC. We can answer any questions you may have about bankruptcy and whether Chapter 7 or Chapter 13 would be more appropriate for your situation.

Contact us today at 866-493-1308 for an appointment. You can also fill out our convenient online form to begin communication.