Having the right personal bankruptcy facts is definitely important if you are considering filing today. After all, there are new bankruptcy laws all the time, and it is important that you are up to date on those laws, what it takes to file, your bankrupt options, and more.
If you are interested in finding out how to file, here is a closer look at personal bankruptcy facts, laws, types, and everything else you need to know when it comes to diy bankruptcies and how it affects you.
What is It?
First of all, when it comes to the facts, it is definitely important that you know what bankruptcy actually is. Basically this is a legal way that you can suspend temporarily and then go on to prevent any actions from debt collections.
After you file online or offline, the courts will give you a stay, which will not allow creditors to try to collect any debts that you owe them. Of course, in many cases you will need the help of an attorney and there may be fees involved and personal bankruptcy protection may be something worth checking into as well.
Bankruptcy Facts on Discharge
There are some facts that you need to know about discharge as well. Once all the legal proceedings have been done and you are found bankrupt, your debts are all discharged.
This means that you have been forgiven of those debts, and this is all noted in your court records, and you are not longer liable for those debts anymore. After the debts are discharged, usually creditors are not able to attempt to collect these debts.
Although many debts can be discharged, you will find that some accounts cannot be discharged at any time. Debt that is incurred by theft or fraud, tax debt, child support, alimony, and any student loans are not debts that you can discharge through the process.
Options for Filing
If you want the facts on how to file, you need to understand that there are a couple of different types that you can file. Here is a look at the bankrupt options that are available to you.
Chapter 7 - This is known as liquidation, in which you turn over the assets you have to a trustee. Then the assets are sold and the money is given to creditors. After this is done, debts are all discharged.
Chapter 13 - This type allows debtors to use future income to pay off debts. A plan for repayment can be presented and in most cases, property can be kept. There are a few disadvantages to this type. You will have to pay extra income to creditors, you cannot sell assets or get new debts, and the filing still shows up, even if you pay the creditors in full.
Chapter 11 - Another type to know about when getting the facts is Chapter 11. This is the type that allows for the reorganization of debt and in many cases corporate debtors use this option.
Bankruptcy Facts About Your Taxes
When it comes to the personal bankruptcy facts, many people are confused about taxes. Whenever you file for either Chapter 11 or Chapter 7, the collection activities, whether by the state or IRS, will stop.
However, after filing, the activities of tax collection will again resume because you cannot discharge any tax obligations that you have by declaring bankruptcy. During this time penalties and interest can continue building up as well.
On the other hand, if you are going with Chapter 13, when you file, the penalties and interested are halted, and you can pay off those taxes over the life of the specific payment plan that is developed through this type.
It is definitely important that you do not make the mistake of thinking that back taxes will go away when you file. This is not the case. Taxes cannot be discharged, so at some point, you will have to pay them.
Bankruptcy Facts Co-Debtor Information
In some cases when you file, there can be mortgages or notes that have cosigners on them. When you file, Chapter 13 can stop any actions against the co-debtors as well, even if the co-debtor is financially sound and is not involved in the proceedings.
However, if you happen to be married and the debts were accrued while you have been married, then both will need to file or the debts can then be transferred to the spouse that does not file. It is important to file together if you are married to avoid this problem.
Bankruptcy and Your Credit
Before you decide to file, it is important to learn the facts. Although every creditor is different and they all respond and react a bit differently, you can expect your credit to suffer when you file.
However, this doesn't mean that credit is not obtainable for you. Some creditors will go ahead and give credit to those who have recently gone through bankruptcy, since this is something you can only file every seven years. Of course, if you do get credit, at least for the first few years, you can expect those rates to be on the high side, since you are considered to be high risk to creditors.
The most important thing you can do to take control of your debts and get your future back on track is to do something. Take action. Starting Today, you will have the knowledge and power in your hands to easily change your life financially!
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