Four Things You Need to Know Before Filing For Bankruptcy


When you find yourself buried under mountains and mountains of debt and it looks as if there is no way out of it, filing for bankruptcy is an option for you. Before you file for bankruptcy however, make sure that you are aware of its short-term and long-term consequences. A bankruptcy can stay on your credit file for ten years. During this time, it will be extremely hard for you to obtain a loan or get financial assistance. In the future, you never know when you need the money, especially when it comes to emergencies regarding your health and safety. Before filing for bankruptcy, here are some things that you have to be aware of.

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Common bankruptcy types
There are various types of bankruptcy. One of the most common types is the chapter 7, which is a liquidation or straight bankruptcy. This means that all assets and properties of the individual will be liquidated to pay off the debt. The other popular type of bankruptcy filing is the chapter 13. Instead of liquidation of all assets, a repayment plan is set for the individual. Before filing for either type, the individual has to undergo a means test. Many are forced to file a chapter 13 because the means test makes it difficult to file for a chapter 7.

Hiring a lawyer
Some people choose to file for bankruptcy without a lawyer. While this is possible, it is not advisable to go without the aid of a professional bankruptcy attorney Birmingham. Large firms usually assign a paralegal to aid the person filing for bankruptcy. It is better to hire a lawyer directly so that he or she can closely help with the case and explore all possible options to go about the filing. Even if you cannot afford an attorney, you may qualify for free legal services. You can contact your local bar association for information regarding their "pro bono." There are law schools and legal clinics that offer free services.

Filing without an attorney
Partnerships and corporations require a lawyer to file for a bankruptcy case. For individuals, they have the option to represent themselves without the aid of an attorney. However, because of the various statutes of the bankruptcy law and the complicated system in which it operates, filing for bankruptcy without an attorney can prove to be difficult especially if the individual is unfamiliar with legal terms and processes. It could be very difficult to file a bankruptcy successfully. The rules that govern filing for bankruptcy are very technical and the individual's rights may be compromised with one misstep. Bankruptcy also has long-term legal consequences, especially in the individual's future finances. Once the individual fails to file a required document, he or she may lose protection and benefits or the right to file another case in the future.

Credit counseling
Individual debtors are required to undergo credit counseling with a government-approved credit counseling provider within 180 days before the bankruptcy case is to be filed. The individual is also required to file a certificate of credit counseling and statement of compliance given by the provider. If the individual fails to file these requirements, their case may be dismissed.


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