If you feel like there is no way out of your current financial situation, you may want to consider filing for bankruptcy. Keep in mind though that filing for bankruptcy may calm you now, your financial situation is anything but an escape free card. It is important that you know what bankruptcy means and how it can affect your life before you choose to file.
What are the differences between a 7, 13, and an 11 chapter bankruptcy
For the most part, people will decide to file for bankruptcy as their last resort, because their financial obligations are more than likely not going to be fulfilled. A common myth is that bankruptcy is mostly for people who have acquired an excessive amount of credit debt, and although this may be true, people often will file for bankruptcy after they have taken a large financial hit, such as a lawsuit or health costs.
Another falsehood is to think that bankruptcy will wipe away your responsibilities. That is not true. You will have to settle your bankruptcy, and what type of bankruptcy you file will depend on how you pay: chapter 7, chapter 13, or chapter 11.
There are also other kinds of bankruptcies (for example, Chapter 12 is for farmers or fishermen), but 7, 13 and 11 are the most well known.
You will need to sell off many possessions (such as a car or a second home) in a Chapter 7 to pay off some of your obligations. Most of your assets will most likely be exempt from this prerequisite, but that will depend on the state you live in, your financials, and whether that possession is considered essential. To file chapter 7, you will need to meet qualification criteria, and most likely, the most important one is getting yourself below the standard income.
In a Chapter 13 bankruptcy, by setting up an installment plan, you promise to fulfill your financial obligations over the next 3 to 5 years, and you can hold onto your properties. Fortunately, some of that debts is likely to be repaid.
Chapter 11 bankruptcy are similar to Chapter 13 in that you hold onto your properties, but it is only for corporations. A business can also file for Chapter 7 bankruptcy, however asset liquidation can be a destructive business move, so a Chapter 11 is a often a better option.
In a Chapter 11, you basically keep your assets, but it requires a plan to probably to pay off some of the debt owed, or have debt forgiven.
How is my credit impacted if I declare bankruptcy?
Bankruptcy can seriously damage your credit history and will take time to rebuild. The Best Bankruptcy Lawyer in Fort Myers, Brian Zinn, will assist you with the two kinds of bankruptcy that are not handled in the same way. Since chapter 7 bankruptcy completely eliminates the debt that you show when you file, it will show for as long as ten years on your credit report.
And though Chapter 13 bankruptcy is still not perfect from a credit score advantage, the plan is seen as better because you are still paying off some of that debt, and it remains as long as 7 years on your credit report.
Once the court discharges your bankruptcy officially, meaning that you don’t owe the debts you have in your filing, it may be difficult to get credit for some time, especially with good rates. In either filing, certain credit lenders do work with people who have gone through bankruptcy or other difficult credit issues, so your opportunities are not hopeless by any means.
Credit score reports often prefer fresh data over any old records. In time you credit score will rebound with good post-bankruptcy financial practices, even though the bankruptcy still shows on your credit report.
How will filing bankruptcy affect me?
The hit to your credit score is going to be big and will feel tough at times to deal with. This is why we recommend you get the help of local Fort Myers Bankruptcy Lawyer, Brian Zinn. If your current credit score is good, you’re going to drop more. And, if your score is already low as of now it will, unfortunately, drop more. At the end of the day, you have a negatively impacted credit score but Brian Zinn can help you lay our a plan for recovery.