It is imperative that anyone who is considering filing for bankruptcy takes the time to think carefully about what it means to file. There are several ways that this can impact your life now and into the future. One of the most important to many people is that the filing temporarily halts the ability of your creditors to try to collect the balances on your accounts. This is because the court issues an automatic stay when you file for this type of financial relief.
You have to decide which chapter is the best option for your case. The most common forms of personal bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy that doesn’t require payments to the bankruptcy trustee, but it does have income limits. Chapter 13 requires you to make payments on a regular schedule, but you can keep more of your assets if they were going to be in jeopardy in a Chapter 7. Just because you file a Chapter 13 doesn’t mean you are paying all of your creditors. They may only get a small percentage of what is owed.
One reason for bankruptcy that is fairly common is medical bills. Even though many people think frivolous spending is the underlying reason in most cases, the fact is that most people are responsible with their finances. Around 50 to 60 percent of cases have some kind of underlying medical issue there that contributed to the filing.
When you file for bankruptcy, you have to think about any joint account holders you have, also known as cosigners. Unless that person is your spouse and is filing with you, they aren’t going to be protected. This means that the other person on your account could be held liable for the entire balance of the account even if you are relieved of the responsibility during the bankruptcy filing.
Make sure that you look at the entire situation and determine whether there are other options that you might have. Bankruptcy is a responsible financial tool, but you should make sure that it is right for you. Your lawyer will help you determine which type of bankruptcy is best for your situation.