The idea of filing for bankruptcy can be scary and confusing. It is not a decision to enter into without the proper information. You may have seen an advertisement for a Los Angeles bankruptcy attorney on television or on a website, and the idea of paying a few lawyer fees and having your debt wiped out may seem like magic. But before you decide to file for bankruptcy, you should educate your self about the process, and gain an understanding of what bankruptcy actually means. Here are some things to consider when deciding whether bankruptcy is the right decision for you.
Types of Bankruptcy
There are many different chapters of bankruptcy, including Chapter 11 (used mostly by businesses) and Chapter 12 (open to fisherman and farmers), but the two chapters most commonly filed by individuals are Chapter 13 and Chapter 7.
In Chapter 13 bankruptcy, the debt is not eliminated. Instead, the court comes up with a plan for repayment which they determine to be within the filer\’s means. Credit is then rehabilitated by payments made through this court-approved plan.
Chapter 7 bankruptcy does wipe out most unsecured debt. However, there are certain types of debt not discharge-able through Chapter 7. These types of debt include:
Child Support
Spousal Support
Most Student Loan Debt
Property Taxes
Income tax going back less than 3 years
Effect of Bankruptcy on Credit Score
The main disadvantage cited when cautioning individuals against bankruptcy of any chapter is that it stays on your credit report for up to ten years. Although this may deter some people, it is important to remember that if you are considering bankruptcy, your credit score is probably in pretty terrible shape as it is. If you think you can pay off your debts individually, or if they are close to falling off of your credit report, then the effect of bankruptcy on your credit score is something to take into serious consideration. However, if you are in a position where your credit score has no chance of improving in the next 10 years anyway, then this is not of much concern.
Bankruptcy Abuse Prevention and Consumer Protection Act
This legislation went into effect in October 2005, changing some of the terms of filing for bankruptcy. In current bankruptcy proceedings, a means test is applied to determine whether the income of the person who is filing is low enough in proportion of their debt for them to qualify. This is based on a median income determined for each state. Another stipulation implemented by BAPCPA is that before filing for bankruptcy, the individual must meet with a non-profit debt counselor to discuss other ways of dealing with their debt. They must have a form signed by the counselor indicating that this session occurred.
Other Methods of Filing
Contacting bankruptcy lawyers is not the only option you have for filing. You may download the federal bankruptcy forms and fill them out yourself, although this option is not advisable unless you have an in-depth knowledge of bankruptcy laws. There is also bankruptcy software available, which works much like tax-prep software in that it guides you through the filing process. You can also use a full-service online preparer, although this person is not an attorney and cannot offer legal advice. They simply prepare the forms for you.
The fees for a bankruptcy attorney are usually between $1,000 and $2,000. The fee to file is about $300. Bankruptcy can be a new beginning, and you may determine that the fees of hiring a lawyer are worth the peace of mind you will gain from having your debt under control. Make sure you educate yourself and stay informed through every step of the process, whatever your decision.
Do you need a Los Angeles Bankruptcy Attorney? There\’s valuable information regarding the conditions of bankruptcy and what you should do. Make sure you talk to bankruptcy lawyers before it gets too late!
Related posts:
- Charleston Bankruptcy Attorney: How To Decide If Bankruptcy Is Right For You
- A Chapter 13 Bankruptcy Attorney Will Help An Individual With The Filing Plan
- Understanding The Different Types of Individual Bankruptcy Filings
- A Debtor’s Guide to Bankruptcies
- Hiring A Great Los Angeles Bankruptcy Attorney
