What You Need to Know When Filing for Bankruptcy

Although some people might balk at the idea of bankruptcy, it may be your best option. A lot of people don't know how to file for bankruptcy in Memphis before they sit down with an attorney. If you find yourself drowning in debt with no end in the near future, it is time to see a bankruptcy lawyer about your financial future and how bankruptcy might be able to offer you a fresh start.

Decide If Bankruptcy Is a Good Option

The first step you need to take when you are thinking about filing for bankruptcy is meeting with an attorney to find out whether bankruptcy is a good option for you. You and your lawyer can review your income and expenses and figure out if filing for bankruptcy is going to provide you with a good solution.

Look at What Kinds of Debt You Have

Bankruptcy does not just take care of credit cards or medical bills. It takes care of both of these things and many other types of debt as well. However, some types of debt are not discharged in bankruptcy. For example, if you have child support back payments or owe back taxes, bankruptcy will not take care of these. If these types of fees are the majority of your financial woes, you might need to start thinking about some of the alternatives to bankruptcy, such as a more workable budget and cutting spending in some areas to make more room in others.

Think about Your Cosigners

Make sure that before you jump into bankruptcy that you are thinking about anybody who might have cosigned on a loan for you or who might hold any credit card debt jointly with you. Once you file for bankruptcy, if you decide to do so, the responsibility of the debt will fall on your cosigner or joint debtor. In an ideal world, one person on an account or loan filing for bankruptcy would clear the debt entirely. However, this is not the case, and if they are unable to make the payments, their credit will be taking the hit for your decision.

Know about the Different Bankruptcy Chapters

In terms of consumer bankruptcies, your lawyer will probably talk to you about Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is the type of bankruptcy that most people think of when they hear about bankruptcy. Under Chapter 7, all of a person's unsecured debts, such as medical expenses, credit cards, and signature loans are cleared, giving you a fresh start.

Chapter 13 bankruptcy, on the other hand, is also known as reorganized bankruptcy. This type of bankruptcy involves the bankruptcy court pulling together all of the dischargeable debts that you have and reorganizing all of your payments into one manageable monthly payment.

The type of bankruptcy that you file depends primarily on your reasons for filing for bankruptcy and what your average monthly income is. For instance, while a Chapter 7 bankruptcy would certainly be enough to stop a wage garnishment or halt a repossession or foreclosure for a while, a Chapter 13 bankruptcy can put all the back payments on your house and in your car into your reorganized payment plan. This will allow you to keep your house and cars and make the payments in full and on time going forward.

Hire the Best Lawyer

Filing for bankruptcy may not be a good decision but it may also save you financially. Make sure that you work with a qualified and experienced attorney who can help you know how to file for bankruptcy in Memphis understand the benefits as well as any alternatives that might also work in your favor.

Source : articlesbase.com