Bankruptcy laws are designed to help people who can no longer pay their loans. Should your loans grow to be so much that you just can’t handle them, bankruptcy is a viable option. Despite the bad rap it gets from popular culture and the media, bankruptcy is very common. In 2013, there were an estimated 1,071,932 bankruptcy filings in the United States.
Different types of bankruptcy are for different people — remember that a business might file Chapter 11 while a person might file for Chapter 7. Make sure that you have properly assessed your debt situation and are prepared to file the right chapter.
There is a lot more to bankruptcy than it at first seems. Check out these fun facts to find out what you didn’t know about bankruptcy and the process of filing cases.
1. A Judge Decides Your Fate : Thats right, your bankruptcy case is actually brought before a judge and must be filed in federal court. On the bright side, bankruptcy laws are pretty uniform throughout the country, but on the downside, you can’t just file a couple of papers and be done with the whole process.
2. Chapter 7 Bankruptcy Doesn’t Wipe Out All Debts: In 2013, there were a total of 728,833 Chapter 7 bankruptcy filings. This is the most common type of bankruptcy, and it is normally designed for individuals. It stays on your credit report for 10 years and typically takes around six months to fully complete. But, it won’t eliminate your student loans or tax debts.
3. Creditors can force you to go bankrupt: You heard correctly — if your debts are high enough, creditors can petition the court and ask a judge to declare you bankrupt. If the judge complies with the request, you can be put on a court mandated payment plan.
The most essential thing to remember about filing bankruptcy is that it doesn’t wipe the slate clean — it simply gives you a chance to restructure your debt. Consult with a bankruptcy attorney to get bankruptcy help and consultation. Your bankruptcy lawyer can guide you through the process and its aftermath.