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Filing bankruptcy has become a far more common occurrence then it was, say, twenty years ago. With credit becoming the way of the world, it is more important than ever that consumers protect their credit rating. Apartment complexes often check credit before renting, and automobile insurance companies check an individual's credit rating and that rating is figured into determining your policy rate. Filing for bankruptcy is a large, long lasting black mark on your credit impacting your credit rating,which hinders your ability to obtain new credit. This, of course, makes bankruptcy a less than desireable means of eliminating debt, but there are times when it is the only way to get out from beneath that crushing mountain and get a fresh start.
There are several types, or Chapters, of bankruptcy that can be filed. The two bankruptcy chapters that individuals or families generally file are either a Chapter 7 or Chapter 13 bankruptcy.
Chapter 13 banktruptcy is essentially an opportunity to gather all debt, negotiate settlement on those debts and make a payment plan through the courts to pay off those debts over a period of time. In this scenario, it is possible to keep your car and your home, and continue making payments on those loans, provided something can be worked out between the court and the lender to everyone's satisfaction.
Chapter 7 bankruptcy is a complete liquidation of assets and debt; this generally means that you are completely unable to satisfy any of your debts and after determinations of any assets that can be used to pay off creditors, the bankruptcy wipes most all debt clean. In this scenario, however, it is quite possible that you may have to surrender any vehicles you are still paying on. The laws regarding what a person filing a Chapter 7 bankruptcy vary. Again, this is where your attorney can provide valuable information to assist you in making an intelligent, well thought out decision.
There are both good and bad sides to filing, which your attorney will go into greater detail with you when you meet, but it is important to note that outstanding taxes and possibly child support are generally not dischargable in any bankruptcy.
When you have chosen counsel to represent you and handle your bankruptcy, you will probably meet with him/her to go over your debts and assets, and formulate a plan determining which type of bankruptcy you will file. Your attorney will explain to you in depth what the reprecussions are for filing bankruptcy, exactly what it entails, and its effect on your credit rating.
At that first meeting, it will help things along a great deal if you can provide some or all of the following documentation to your attorney: tax returns for the previous three years, any income statements showing what your household brings in monetarily, credit cards and copies of bills, collection letters, receipts, etc. Also, if you are paying child support, bringing that information to the meeting is a prudent idea. Essentially anything that can be considered an asset or a debt should be represented so that none of it is missed in the bankruptcy. If you omit a creditor from the list, they may not discharged on your bankruptcy, so it is wise to be as thorough as possible.
If you are buying a home, bring the mortgage information with you. If you own your home, bring the deed. If you own more than one piece of real property, provide that information to your attorney also. If you are buying a car, bring your contract and statements from the entity who is financing the automobile loan, and if your vehicle(s) is/are paid for, bring the title(s).
The goal here is to give your bankruptcy attorney every scrap of information you can, so he/she can guide you toward the best options for you, and possibly help you keep things like your car and your home.
Filing bankruptcy is generally an unpleasant experience, but it does give one a chance to settle up everything and get a clean slate to rebuild from. Often people file bankruptcy and after time are able to get loans and credit again; rebuilding a good credit rating for themselves with their past credit problems firmly behind them and in the past. It is entirely possible to go through a bankruptcy and given enough time, have credit cards again and be able to finance an automobile or even a home.
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