A Look At The Top 5 Things To Be Aware Of Before Filing For Bankruptcy

If unemployment, mounting medical bills or poor financial decisions has landed you in huge pile of debt, then filing for bankruptcy offers you an opportunity to make a fresh start.

But it is not as easy as it sounds. Filing for bankruptcy does not merely involve paperwork. The actions you take or do not take will have a profound impact on your bankruptcy claim. It is important to note that a filing for bankruptcy can significantly lower your credit score, making it difficult to secure loans.

Hence before jumping on the bankruptcy bandwagon, it is highly recommended to seek the advice of expert bankruptcy lawyers practicing in Milwaukee, WI.

5 things you need to know about filing for bankruptcy

After extensive discussions with your attorneys, if you are sure that bankruptcy is the road forward, then it is important to know the below 5 points about filing for bankruptcy.

  • Types of bankruptcy

Before filing for bankruptcy in Milwaukee, WI it is imperative to learn about the different types of bankruptcy and decide on the one that suits your situation the best.

Below are the two types of personal bankruptcy claims:

Chapter 7: this is a liquidation type of bankruptcy claim. it is ideal for people who do not have the resources to settle their present debt. In order to file of Chapter 7 bankruptcy, debtors have to clear a “means test”. They may also have to sell any non exempt asset they possess. by filing for  Chapter 7 bankruptcy debtors have a chance to discharge their unsecured debt such as credit card bills and personal loans.

Chapter 13: this is a “reorganization” type of bankruptcy claim. Here debtors will have to abide by a repayment plan. They are obligated to pay back their creditors over a period of time. In order to be eligible for Chapter 13 bankruptcy claim, debtor must have a fixed source of income. The main benefit of this type of bankruptcy claim is that debtors are not forced to liquidate their properties.

  • Bankruptcy will impact your credit score

As mentioned in the beginning of the article, filing for bankruptcy will have an effect on your credit rating. It will not only destroy any good credit history but also appear on the person’s credit report for a minimum of 10 years.

After your attorney has filed for bankruptcy in Milwaukee, WI, you are mandated by law to inform any future employers about it. Debtors must also mention the same on any government reports or medical forms.

As most banks and money lenders look at the credit score before approving a loan, filing for bankruptcy will affect your chances of securing new loans.

  • Not all debts are forgiven

Bankruptcy is not a one stop solution for ending all your financial woes. If your attorney practicing in Milwaukee, WI has filed for bankruptcy on your behalf, it is important to know that there are some debts that will not be excused. Below are few debts that are not forgiven:

  • Auto loans and mortgage
  • Student loans
  • Spousal support and alimony
  • Some types of tax debts
  • luxury items bought using credit cards

Apart from these, creditors also have the legal right to challenge the discharge of debts. Two months after the 341 meeting, creditors can file a case against a debtor asking for repayment of their dues.

  • Bankruptcy filings are public

Filing for bankruptcy can affect you in many ways. Hence people must explore all possible options before filing for bankruptcy. All the information provided during filing of the claim is public. The names of people filing for bankruptcy are made available online. It is also published in local newspapers.

Your finances will be up for public scrutiny and this can put you in a very uncomfortable situation. Not only will debtors lose control over their finances but also lose their right to privacy.

Hence, before filing for bankruptcy in Milwaukee, WI it is important to engage in a productive discussion with your attorney to know about other possible options – http://mydebtadvisors.com/milwaukee-wi-office-locations.

If you want your bankruptcy claim to be handled by expert lawyers practicing in Milwaukee, WI then you must be ready to cough up some money. While some attorneys charge a fixed rate others charge as per the debt amount.

If you choose to handle the bankruptcy claim on your own, you still have to pay the filing fees which can be substantial.  If you have filed for bankruptcy under chapter 7 then such legal fees will not be wiped off and must be cleared before starting the bankruptcy proceedings.

Conclusion

Filing for bankruptcy is not an instant fix for your financial woes. People must gather as much information as possible about the process and the impact it can have on their lives. It is also advisable to attend credit counseling and talking to financial coaches before filing for bankruptcy.