When debts begin piling up and you cannot make all the payments, where can you turn for help? Some people turn to debt consolidation, while others turn to debt settlement. Some people also turn to bankruptcy. If you want to use bankruptcy to eliminate your debt, there are several essential things you should know before filing. Here are four vital things.
1. There Are Two Primary Branches
First, you might not realize that there are two primary branches of bankruptcy, and you might only qualify for one. Some people qualify for both, though. The goal is to learn the differences between Chapter 7 and Chapter 13 and determine two things:
- Which one(s) you qualify for
- Which one offers the most relief
Visiting a bankruptcy lawyer is the way you can find the answers to these questions.
2. Bankruptcy Takes Time
The next thing to know is that bankruptcy takes time. Chapter 7 is a much faster branch than Chapter 13, but Chapter 7 still takes around four to six months. If you use Chapter 13 instead, it can take up to five years. As you can see, using bankruptcy does not offer instant results. It does, however, offer instant relief. Right after filing, you will receive relief from creditor harassment. You will also be able to stop paying some of your debts.
3. You Will Still Have Debts to Pay
When using bankruptcy, you will still have to pay some of your debts. If you use Chapter 7, you will receive forgiveness on certain debts you have, but you will not receive forgiveness on every debt. Therefore, you will have to continue paying the debts that were not forgiven. Through Chapter 13, you will repay most of your debts. When you finish it, you might receive forgiveness on some debts, but this does not always occur.
4. It Will Affect Your Credit
Finally, you might want to talk to your bankruptcy lawyer about the effects that bankruptcy has on a person's credit. Filing for bankruptcy offers a lot of great benefits, but it also remains on your credit report for seven to ten years. Therefore, it will affect your credit, and you should know this before filing.
Bankruptcy helps many people eliminate their debts, and it might be right for you and your situation. You can find out by scheduling a consultation visit with a bankruptcy lawyer in your area.