Debt Relief Via Bankruptcy – Facts Vs. Fiction
With so many losing their jobs or having their hours cut back in this difficult economy, more and more people are having trouble paying their bills, and some are worried about losing their homes.
Advertisements for “debt elimination” methods are pervasive in today’s media, popping up just about everywhere. Understanding the difference between fact and fiction regarding debt relief and bankruptcy is critical, as the path you choose now can continue to impact your future for a long time.
If you are thinking about filing any form of bankruptcy proceedings, it is wise to hire a bankruptcy attorney. These debt relief experts can help you determine what options are available to you, and which choice is best for your situation. As bankruptcy laws differ between states, it’s important to consult with a local attorney to make sure the proceedings are filed correctly.
One piece of fiction that many people in need of debt relief worry about, and needlessly procrastinate over, is the possible social stigma of the debt relief proceedings. In the case of celebrities and public figures publicity is almost inevitable, so it is a legitimate concern for them. But the vast number of filings becomes known only to the affected creditors in the process.
If you go through some form of bankruptcy, will this eliminate all your debts? Your attorney can determine whether your financial circumstances meet the current means test for making debt repayments through Chapter 13, a wage earners plan, or if a Chapter 7 filing is more appropriate for you. Both the Chapter 7 and Chapter 13 filings contain many types of debt elimination exclusions such as child support, criminal restitution, and tax liens.
Another area that is rife with fiction is that you will lose your house. Both Chapter 7 and Chapter 13 forms of bankruptcy often allow you to keep your current home. In fact, a Chapter 13 filing, in some instances, is initiated specifically to help homeowners prevent foreclosure. This is an area where you want an experienced bankruptcy lawyer handling your Chapter 7 and Chapter 13 filings and advising on your case in order to protect your assets to the full extent of the law.
For some debtors the question of filing in a state in which they don’t reside comes up when they are contemplating a move, or where the debt might have been incurred out of state. Residency requirements before you are eligible to use a state’s exemptions have now stretched out to two years so it is important to consult with an attorney in the state in which your debts were incurred before changing jurisdictions.
Despite the advertisements you may run across on TV, radio or the Internet, debt relief of any kind will impact your credit score. This includes settling your debts with creditors by negotiating down the balances as well as filing for bankruptcy. Your credit score will not improve after a bankruptcy due to there being less debt — it will certainly drop. Credit bureaus keep records of all your credit transactions for 7-10 years. Your credit score may drop significantly after a bankruptcy is filed. Most creditors will show negotiated credit payoffs as “PAID SETTLED” which will also negatively impact your scores.
That having been said, your credit isn’t permanently destroyed after debt relief. There will probably be opportunities to rebuild. Often, shortly after discharging your debts, you will receive offers for credit cards again. It will likely be difficult, if not impossible, to qualify for real estate and car loans. If you do qualify, your rates and terms will probably be less favorable.
If you do find yourself in a situation where either restructuring or debt relief of some kind is absolutely necessitated, it is strongly recommended that you work with an experienced attorney who can help you understand your options. Your credit score can be improved over time.
If you’re considering bankruptcy in the Detroit, Michigan metro area, contact A Better Way Bankruptcy. With nearly three decades of collective experience in bankruptcy law, their friendly, helpful and compassionate attorneys and professionals can help you obtain relief from debts, stop calls from creditors and get a fresh start. Powered by SEO 2.0 Services
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