Bankruptcy: What Are My Options And Limitations?
Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.
There are few people who expect to file bankruptcy. Situations always change and you are left with the only option, which is bankruptcy, but most importantly you need to understand how to work within this situation. If you get yourself in this type of situation, you will surely find the information in this article very helpful.
Always weigh your options carefully prior to deciding to dive head first into filing a bankruptcy claim. If your debt is relatively low, you may be able to manage it with credit counseling. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Chapter 13
Bankruptcy does not mean all your debts will be erased. There is a type of bankruptcy, referred to as Chapter 13, that enables you to enter into an agreement to repay a part of your debt to each of your creditors. Some people are hesitant to file bankruptcy because they feel obligated to live up to the promises they have made to their creditors. When you file Chapter 13, you can still work with creditors to pay a portion of your debt without crushing under an overwhelming amount of debt.
Look into all of your options before you choose to file for bankruptcy. For example, you can always talk with a lawyer to see about different options through creditors or other means that will not require wiping the entire slate clean. Loan modification can help you get out of foreclosure. The lender is able to help you in a number of ways, such as reducing interest rates, eliminating late charges, and even lengthening the loan, giving you more time to pay. Creditors want to recoup the most money possible from debtors, and they can often get more through debt repayment plans than bankruptcy procedures.
Interest Rates
Once you have filed for bankruptcy, you will want to open a new line of credit, as soon as possible in order to start the credit repair process. This could be challenging because of your damaged credit, but you can start with secured credit cards first. The interest rates will be higher than normal, but then again due to your history you are not going to be able to obtain normal interest rates anyway. You will have better success applying for, and getting loans and credit cards in the future if you start rebuilding your credit now with a new, secured line of credit.
Be sure you’re acting when the time is right. The timing of your filing could be important to its success. Sometimes you should file immediately; however, there are times when it is better to delay until the worst has passed. Discuss your particular situation with your bankruptcy attorney to determine the best time to file.
Many people find that they must file for bankruptcy protection because they have more debt than they can afford to repay. If you are in this position, you need to be familiar with the laws in your area. When it comes to bankruptcy, states have varying laws. For example, whether or not you can keep your home, as well as what you need to do to keep it, is different for every state. Be sure you educate yourself on local laws prior to filing.
Once you go bankrupt, you will need solid advice on what action to take. The process will get easier as you learn all you can. By starting with the information we have presented here, you should be able to begin to come to grips with your personal bankruptcy situation
Bob Spiro
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