Do You Get Out of All Debts If You Declare Bankruptcy
If you are overwhelmed by debt, filing for bankruptcy could take the burden off your shoulders. But, do you get out of all debts if you declare bankruptcy? Well, the benefits of declaring insolvency depends on the type of debt, and how you approach the process. You can either file for bankruptcy under chapter 7 or chapter 13. Continue reading to learn what happens when you file for bankruptcy.
You can either file for insolvency on your own or through or get a third party such as an attorney or DoNotPay. Some people file for bankruptcy on their own because they cannot afford to hire a lawyer. However, going it alone may end up complicating the matter for you. You may not know whether to file under chapter seven or thirteen. In addition, the process of filing is long and tedious. You are also required to draft a repayment plan that may require experience and expensive software.
You can, however, avoid the pitfalls of filing for insolvency by yourself, by using the DoNotPay platform. DoNotPay helps you file under the right chapter, as well as, reduce the complication of filing the petition on your own. You can simplify the process and increase your chance of success by going through the DoNotPay platform. DoNotPay also helps you draft a debt verification letter or a 609 letter.
What Happens When Declaring Bankruptcy?
Bankruptcy or insolvency is a legal process that allows you more time to pay part of your debt or have your debt obligation removed. Filing for insolvency, therefore, helps to reduce pressure from creditors if you are struggling financially and unable to meet your debt obligations. But do you get out of all debts if you declare bankruptcy, or does bankruptcy clear all debt?
When you file for bankruptcy, the court issues a stay order that prevents creditors from enforcing collection measures. Here are some reliefs that may be granted by the stay order;
- Creditors cannot continue making phone calls to demand payment
- The creditors may not deduct money from your account
- Your salaries or wages are also protected since the creditors cannot garnish them
- The creditors are also restricted from confiscating your assets that were not used as debt security
Will I Lose My Property When Filing for Bankruptcy?
Whether you retain or lose your assets depends on the chapter under which the insolvency petition is filed. Here are two points to remember:
- If you file under chapter 7 you could be asked to sell part of your assets to meet your debt obligation.
- However, filing under chapter 13 protects your assets, since the creditors are barred from selling to offset the debt. Instead, chapter thirteen offers you an opportunity to reschedule your debt. You are allowed a fresh start, where you have to clear the debt within three to five years. You could nevertheless lose the assets if you do not honor the new repayment plan.
What Happens to My Credit if I Declare Bankruptcy?
Declaring insolvency helps you ease pressure from creditors, but you may leave with the downside of bankruptcy for years, depending on the actions that follow after filing the petition. Under chapter seven, your unsecured debts will be eliminated. However, since you did not clear the debts, the debt will remain on your credit report for up to 10 years, which makes it difficult to get credit in the future.
The damage on your credit report under chapter thirteen could be mild, since you continue paying the debt after filing for insolvency. Once you are cleared, you could still get credit, but not on favorable terms.
What Bankruptcy Cannot Do
Declaring insolvency provides you temporary relief. But it does not;
- Protect assets that were used to secure the debt
- Remove your child support obligation
- Wipe your student loan
- Remove debts not listed on your bankruptcy papers or debts for fines
- Debts that were acquired fraudulently
What Documents Do I Need to File for Bankruptcy?
The following table illustrates documents you need to file for bankruptcy.
|Documents to have at hand when filing for bankruptcy||
How to Declare Bankruptcy by Yourself
You can file bankruptcy on your own in a process known as “filing pro se.” However, before you decide to file for bankruptcy on your own, check your understanding of the legal process and documentation required in the process. Missing steps or misinterpreting legal terms may adversely affect your petition since the judge or court officials are prohibited from guiding you.
If you still choose to file pro se, you are required to fill bankruptcy form numbered 100. Ensure you fill the form correctly to improve your chances of success. Non-attorney petition preparers can, however, help you fill the form, but cannot offer any legal advice.
Next Steps for Filing for Bankruptcy If You Can't Do It Yourself
Filing pro se not only diminishes your chances of success but is also tedious. You have to fill out long forms and navigate the legal processes on your own. To overcome the complications, you can file for insolvency through an attorney or a third party like DoNotPay.
How to File for Bankruptcy with DoNotPay
The cost of filing for bankruptcy through an attorney is high. However, you can file a successful bankruptcy petition at a lower cost through the automated DoNotPay. The automated DoNotPay platform helps you decide the right type of bankruptcy and will help you fill out the bankruptcy forms correctly.
How to file for bankruptcy using DoNotPay
DoNotPay has you covered in 5 easy steps:
- Search for File for Bankruptcy on DoNotPay.
- Put together a list of your debts, expenses, and assets. If you need help accessing information like your credit report, DoNotPay can help you get your report.
- Let DoNotPay walk you through your bankruptcy options and help you determine whether a Chapter 7, Chapter 12, or Chapter 13 bankruptcy is right for you.
- DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.
- Lastly, DoNotPay will gather all of the forms you need (including available fee waivers) and help you locate your nearest bankruptcy court. All you have to do is complete the required forms, prepare your filing fee, and file the application with your local court.
And that's it! Once done, the court will give you:
- Your bankruptcy case number
- The name of your bankruptcy trustee
- The date, time, and location of your meeting with your trustee
At this point, your case has been filed! Congrats! The automatic stay now protects you from all debt collectors. Your trustee will then contact you for further financial documents you will need to provide. Make sure to attend your meeting as well as complete the post-filing bankruptcy debtors course!
Why Use DoNotPay to Declare Bankruptcy
When you choose DoNotPay you get a fast, easy and successful platform of filing for insolvency.