If you are considering filing bankruptcy or have recently filed, no doubt you have tons of questions. With so much conflicting information it can be hard to know where to turn these days. Let’s explore some of the most important questions and answers you may have about bankruptcy.
What Are the Different Types of Bankruptcy?
There are three different types of bankruptcy, and each of them have different requirements and consequences. The three different types are:
Chapter 7 Bankruptcy
Involves liquidating assets and paying off creditors with the proceeds.
Chapter 11 Bankruptcy
This type of bankruptcy is typically reserved for large businesses deep in debt.
Chapter 13 Bankruptcy
Court-enforced repayment plan where payments are made through an appointed trustee.
Are There Risks When Filing For Bankruptcy?
The short answer is yes, there are substantial risks to consider when filing for bankruptcy. For one thing, not all of your debts will be absolved. Depending on which type you file, you will still be responsible for many debts such as mortgage and car payments and unpaid child support.
You may also lose many of your possessions, and your ability to get certain financial help in the future can be impacted.
Is This Going to Affect My Credit?
If you elect to file for bankruptcy, your credit score will be demolished. In addition to the immediate damage and repercussions, the bankruptcy can remain on your credit report for up to 10 years. Filing bankruptcy will be a matter of public record and can affect not only your credit score, but your ability to take out a mortgage or get any sort of credit approval.
Should I Avoid Filing Bankruptcy?
While filing for bankruptcy can sometimes seem like your only option, the truth is you should avoid filing at all costs. Some of the most obvious drawbacks to filing for bankruptcy are as follows:
- Bankruptcy DOES NOT clear all your debts.
- You can lose your assets.
- It can take up to 5 years to finish the bankruptcy process.
Do I Have Any Alternatives to Bankruptcy?
You absolutely have options before filing bankruptcy. Just as there are many circumstances that can lead a person to financial trouble, such as loss of income or a major emergency or disability, there are also many options available that make more sense for many people. There are ways to get your debts under control without taking the drastic measure of filing for bankruptcy.
At CreditGUARD our main goal is to see you get out of debt and go on to a healthy and successful financial future. As a nonprofit debt consolidation organization, we want to see your debts under control, not add to them with more loans and new credit.
If you are considering filing for bankruptcy, call today and speak with one of our certified credit counselors. You may be surprised to find a solution to your debt management issues that don’t involve bankruptcy.