Filing for bankruptcy means you are legally destitute. There are two types of bankruptcy: involuntary bankruptcy, in which creditors or lenders submit a petition against the debtor, and voluntary bankruptcy, in which the debtor files a petition claiming inability to pay creditors.
The court decides whether your claim can be proven based on the evidence you present. If the court determines that you cannot repay your debts, the court will discharge your debts.
If your Chapter 7 bankruptcy petition is approved, all of your assets will be liquidated to pay off your debts. Some assets are exempt from taxation under federal and state law. Chapter 13 bankruptcy permits debt repayment through a trustee. In either circumstance, you should consult a credit counselor and a bankruptcy attorney.
A credit counselor will work with you to evaluate your financial situation and provide guidance on how to resolve the issue. You may be advised to consider bankruptcy if you have no income or insufficient income to satisfy your obligations.
Before declaring bankruptcy, you should consider how difficult it will be to obtain a loan, locate an apartment, buy a car, and purchase a home. The record of your bankruptcy will remain on your credit report for up to ten years.
If you decide to file for bankruptcy, it is advisable to seek the counsel of a bankruptcy attorney. The attorney will inquire about your income and assets in great detail. On the basis of this information, they will develop a model to assist you in deciding whether to file for Chapter 7 or Chapter 13 bankruptcy.
There is an opportunity to repair your credit file when you engage with a debt consolidation company to negotiate a repayment plan or apply for a debt consolidation loan. If you register for bankruptcy, your credit file will be negatively affected.
Chapter 7 bankruptcy is the only option for eliminating debts. There is a cost involved. Before making this decision, you should consider all available alternatives.""
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