Filing for Bankruptcy What You Need to Know 

Are you drowning in debt and not making any headway? Bankruptcy may be the solution you are looking for. Bankruptcy is a legal procedure controlled by federal bankruptcy courts. It is aimed at assisting people and organizations in reducing all or part of their debt or helping them return a portion of what they owe. For more information, you can get the help of bankruptcy attorney Corey Mills today. 

Understanding bankruptcy 

Bankruptcy is a legal process that can help those struggling to repay their obligations. Consumers may be able to eliminate some unsecured debt or enter into a repayment plan with payment terms that are more suitable to them, depending on the kind of bankruptcy filed.

A bankruptcy filing ends debt collection calls, litigation, and salary garnishments. The process is time-consuming, and hiring an attorney is suggested, but you should see financial advantages within six months of filing. Some obligations, such as current taxes, school loans, and child support, cannot be discharged in bankruptcy.

Types of bankruptcy 

Chapter 7 and Chapter 13 are the two most popular types of consumer bankruptcy. Businesses often file for Chapter 11 bankruptcy.

  • Chapter 7 bankruptcy 

Chapter 7 bankruptcy, sometimes known as “liquidation” because most unsecured obligations are discharged, is the quickest and most common type.

  • Chapter 13 bankruptcy 

Chapter 13 bankruptcy, sometimes known as “wage earners” bankruptcy, restructures debts into a three- to five-year payment plan.

  • Chapter 11 bankruptcy 

This chapter, known as a “reorganization” bankruptcy, is primarily employed by companies and enterprises.

Steps before filing for bankruptcy 

Bankruptcy is often seen as a final resort for individuals deeply in debt who see no way out. However, before declaring bankruptcy, it is wise to investigate certain options. They are less expensive than bankruptcy and are less likely to harm your credit record.

Your creditors, for example, may be eager to compromise. Rather than waiting for a bankruptcy settlement and risking receiving nothing, some creditors will agree to lower payments over a longer period. In a house mortgage, contact your loan servicer to learn about your choices. Some lenders provide choices. 

Even the Internal Revenue Service (IRS) can often be interested in bargaining. You may be eligible for an offer in compromise if you owe taxes and the IRS agrees to accept a reduced sum. The IRS also provides payment plans, allowing eligible taxpayers to settle their debts over time.

Speak to an attorney. 

If you have chosen to file for bankruptcy, you should first talk with an attorney. While it is possible to file without one, a trained attorney is generally necessary due to bankruptcy’s long-term financial and legal ramifications. Your attorney can advise you on the best kind of bankruptcy for your case.

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