Before I enter another post about my own bankruptcy, I need to dispell a myth. I keep hearing that you can't go bankrupt anymore unless you are Donald Trump or some other mega mogul. This is bugging me because it's flat out wrong.
If you are thinking about going bankrupt, and you are not familiar with how bankruptcy works, you may think that having a successful bankruptcy is next to impossible. You have probably heard that you can’t anymore. And you probably heard this from people who have never had to file for bankruptcy. People who don’t know what they’re talking about.
In 2005 the bankruptcy laws changed and the news from on high was that simple folk like us could no longer declare bankruptcy. Or that is was next to impossible. We believed this news. I know I believed it and was scared to death that I wouldn't be able to file.
It is true that the 2005 bankruptcy law changes made it tougher to file for a chapter 7 bankruptcy. Income and expenses are now used to determine which chapter of bankruptcy a debtor will qualify for. It is now also required that debtors complete credit counseling classes to receive a discharge (don’t worry—these are fairly easy and cheap and can be taken online). The purpose of these changes was to reduce number of people that were wiping out debts that they could afford to pay back.
A chapter 7 bankruptcy is one in which your assets, above and beyond what you can exempt, are liquidated and the proceeds are distributed to your creditors. Don’t panic at that thought! Most of what you have is not worth what you think it is and nobody wants your old furniture or clothing. For more information see Chapter 7 Bankruptcy Information.
More people are forced into a chapter 13 now than before the 2005 bankruptcy code changes. In a chapter 13 bankruptcy, you are determined to have enough income that you can pay some or all of your debts to your creditors and you are put on a payment plan which lasts up to five years. This is a rigid program and you must live up to the terms of your bankruptcy, but it is far easier than swimming in a mountain of debt that you will never be able to pay back.
Don’t get me wrong. Going Bankrupt is a tough thing to go through. Especially emotionally. But it is not as difficult an achievement as a lot of folks would have you believe.
Whether or not absolved of some, most, or all debt, bankruptcy may be the only way back to financial health for the insolvent debtor. Much will depend on your unique situation----no two bankruptcies are alike. Make an appointment with several attorneys to discuss your options. For help selecting your attorney, read my Bankruptcy Attorney Tips.
As always, best of luck!
No comments:
Post a Comment