Making Sense Of Your Financial Mess

About Me

Making Sense Of Your Financial Mess

A few years ago, I realized that I had a real problem. I hadn't been able to pay my bills in awhile, and I was left wondering what to do. Bill collectors called me non-stop, and I wasn't sure how to go about making things right. Fortunately, a friend of mine who understood my mess explained that it might be a good idea to meet with a bankruptcy attorney. After I went, I was blown away with the level of care and understanding I was given. This website is all about helping other people to see the light, even when they are in the midst of battling a hectic financial situation.

Three Things You Should Know About Bankruptcy

There are many misconceptions about bankruptcy, so if you are at a point in your finances when you are beginning to think about it, there are several things you should understand. The following are three of them.

Creditors have rights

You may not think highly of the lenders who are trying to collect their money, but once you go down the path of bankruptcy, they still have rights. After you file for bankruptcy, they have the right to challenge it in various ways. If they believe you have more income or assets than you're stating, they can bring this to the attention of the bankruptcy judge. Bankruptcy laws can also protect credit card companies from an individual charging their cards up to the limit right before a bankruptcy filing. These last minute charges can be exempt from a discharge.

You must qualify for a bankruptcy

Not everybody is eligible for bankruptcy, so it is not as simple as deciding that it is time to file. To begin with, there are two types of bankruptcy, Chapter 13 and Chapter 7. Chapter 7 has more stringent standards to qualify because this type of bankruptcy will discharge most or all of your debts. Often, when people refer to bankruptcy as a fresh start, it is a Chapter 7 filing they are talking about. Chapter 13, on the other hand, is a reorganization of your debts. Sometimes there is also a reduction in your debts. Monthly payments are made to a trustee for a specified amount of time. You must also qualify for Chapter 13, but the bar is higher than with a Chapter 7 filing. Both income and assets are taken into account when filing for either form of bankruptcy.

Not all debts can be discharged

Even if you qualify for a Chapter 7 bankruptcy, there are certain debts that are exempt. This means that if you qualify and file for a Chapter 7 bankruptcy and your debts are discharged by a judge, it is possible you will still owe money. And for some people, this can be a substantial amount. Student loans, for example, are exempt from bankruptcy, and for many people, this is their most significant debt. Other examples include back child support and income taxes.

Although you should not be discouraged from exploring the possibility of a bankruptcy, you need to understand that the laws may be different than you realize. The first and most important part of pursuing a bankruptcy is to seek legal advice. An attorney can look at your financial situation, and then advise you on the proper course to take.