Bankruptcy Debt Relief – Facts and 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.
It’s important to realize that bankruptcy laws are state specific. There are some laws that will be almost the same, and certainly very similar from state to state. But if you are contemplating filing any form of bankruptcy proceedings, it is important to consult with a local attorney. Bankruptcy attorneys are the recognized experts who can help you determine what options are available to you, and which option makes the most sense for your unique situation.
Many people who desperately need debt relief are concerned about the social stigma of debt relief, fearing that the news of their bankruptcy will be widely published. In the case of celebrities and public figures, this is nearly unavoidable and thus a legitimate issue. For the rest of us, though, few people outside the affected creditors ever become aware of the proceedings.
Many people think that filing bankruptcy eliminates all debts, but this is not necessarily the case. Your attorney can help you decide whether you can fulfill the current means test for making debt repayments through Chapter 13, a wage earners plan, or if a Chapter 7 filing fits your circumstances better. Both the Chapter 7 and Chapter 13 proceedings contain many exclusions where debt is not eliminated, including 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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