Filing for bankruptcy is the only option left for people when they can’t meet their debt obligations. There can be many reasons to run out of money and no literal way to pay it back. This upsets the creditors and they may be hell bent on seizing your assets and properties so as to sell them and have their fair share. You can avoid this from happening by filing for bankruptcy.
It’s a legal procedure where the court decides on your behalf on how you should pay the debt. They might liquify your properties, give you a chance to reorganize and come up with a new repaying plan or ask you to prepare a plan to repay your debt with your income. It all depends upon which kind of bankruptcy code you’re eligible for.
If you’re thinking that filing for bankruptcy is a walk in the park and a way to give you a free pass on your creditors then think again. Your application will be thoroughly checked from the court’s side and then an outcome will be decided. Therefore, it is essential to know about how to file for bankruptcy in the proper way so that the chances of approval are increased.
The benefits you get from filing for a bankruptcy largely depend on what kind of bankruptcy you file for. It is important that you speak to a financial expert to understand things better before you file for one.
Here are some more important thing to know about when you’re filing for bankruptcy:
Who Can File For Bankruptcy?
It’s not that everyone is eligible to file for bankruptcy; there are certain conditions for different types of bankruptcies. The aim behind filing for one should be that a person or business is honest about not being able to pay their debt because the court goes through the application and determines if the person/business is true or not.
Other than that, one important factor that is taken into consideration is past records. If bankruptcy was filed in the past too then it may lower the chances of your appeal to get approved. This is because it implies that the entity or person is still bad with money and can’t maintain finances.
Normally, you cannot file for chapter 7 bankruptcy for the next eight years if you had previously filed for the same recently.
What Does The Court Look Into?
Several things are taken into account such as your income flow for the past six months, type of business and tax repayment conditions. These things help the court determine whether you are true at what you say or are trying to run up large by trying to get a free pass on the creditors.
Also, you will have to take credit counselling ($100 per session) six months before sign you file for a petition.
Does Bankruptcy Help You Get Rid Of All Kinds Of Debt?
The answer to this question is a ‘no’. No matter the type of bankruptcy you file, you cannot get rid of all kinds of debt.
With a bankruptcy approval, credit card debt (unsecured), personal loans (unsecured), hospital bills (unsecured) can be waived off, however, secured debts are not forgiven. They include child support, taxes, fines, penalties, DUI case penalties etc.
What Information Is Needed In The Application?
The approval or rejection rate of your case depends upon the information you put in. You file for bankruptcy online and fill in information which includes:
- All information on the debt you owe (Interest rate, monthly payment, current balance etc)
- Income status (Include information on your source of income and records of the past 6 months)
- Assets And properties (Mention if you have any assets, properties, cash etc).
- Living expenses.
Apart from this, other information may also be required by the court to determine your case.
Make sure you’re aware of these important things when it comes to filing for bankruptcy.