Why Filing For Bankruptcy Isn't Necessarily a Bad Thing

File for Bankruptcy Why Filing For Bankruptcy Isn't Necessarily a Bad Thing

Is Filing For Bankruptcy A Bad Thing?

People often shy away from the idea of filing for bankruptcy because of the social stigma that has become attached. They worry about what others will think or if it will ruin their reputation. But is filing for bankruptcy bad? This article will investigate that question and look at some of the reasons people choose to file for bankruptcy. It also takes a look at the File For Bankruptcy product from DoNotPay that aims to simplify the filing process and make filing for bankruptcy less intimidating. Here are some more articles from the File For Bankruptcy product series.

Debt Verification LetterHow Much Does It Cost To File For Bankruptcy?
Bankruptcy Chapter 13Chapter 7 Bankruptcy
What Happens When You File For Bankruptcy?

What Does It Mean When You File for Bankruptcy?

When a debtor petitions the court to file for bankruptcy, they acknowledge that they owe more than they are able to pay back. Filing for bankruptcy offers debtors a second chance at managing their finances. Which type of bankruptcy you file depends on your specific situation. Chapter 7 bankruptcy is for individual debtors who have an income below the median. If income is above the median income, then you will likely need to file chapter 13. Another common filing is chapter 11, which is for corporations.

What Happens When a Bankruptcy Is Filed?

If you qualify for chapter 7 bankruptcy based on your income, the judge will assess all of your assets. If you own assets that are considered unprotected assets, they may be sold to provide partial payment to your creditors. When filing chapter 13, the judge will work with the debtor to determine an acceptable repayment plan. Chapter 13 generally does not require the liquidation of assets.

Protected or Exempt Assets

When filing chapter 7, the court will assess assets for liquidation. Protected assets are exempt and cannot be liquidated. Protected assets include your main home, a car under a certain value, professional tools of your trade, and retirement accounts. Unprotected assets include any vacation homes, vehicles with high value, cash, stocks, and bonds.

How Long Does the Process Take?

When you file for chapter 7 bankruptcy, the court will often discharge your debts within four to six months. Chapter 13 often takes several years, the actual length of time is determined by the amount of debt and the amount you are expected to pay based on your payment arrangement. The average length of time for chapter 13 is three to five years.

What Happens to Your Credit Rating After Filing for Bankruptcy?

A bankruptcy filing will stay on your credit report for ten years when filing for a chapter 7 bankruptcy. For a chapter 13 filing, it will remain on your credit report for seven years. Having a bankruptcy on your credit report will make it very difficult if not impossible to obtain credit or loans.

Is It Bad to File for Bankruptcy?

Filing for bankruptcy is not the end of the world. It is a serious decision to make, but it can also be a second chance. Bankruptcy gives you the ability to start over financially. When you file for bankruptcy the effects on your credit report are long-lasting, but so are the effects of collection accounts. Here are a few of the most common reasons people file for bankruptcy.

  1. Job loss
  2. Medical debt
  3. Divorce
  4. The danger of home foreclosure
  5. Being sued by multiple creditors

Filing for Bankruptcy Using DoNotPay

How to file for bankruptcy using DoNotPay:

If you want to file for bankruptcy but don't know where to start, DoNotPay has you covered in 5 easy steps:

  1. Search for File for Bankruptcy on DoNotPay.

     

  2. 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.

     

  3. 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.

     

  4. DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.

     

  5. 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 You Should Use DoNotPay to File for Bankruptcy

When you use DoNotPay to File For Bankruptcy, you can feel confident that you are well informed and prepared with the information and forms needed. You do not have to waste time researching the differences between chapters or figuring out which forms to file. Check out these articles in the File For Bankruptcy product series as well.

What Else DoNotPay Can Do

The many products available from DoNotPay handle tasks on your behalf quickly, easily, and successfully. From the difficult to the boring, these products will make it hard not to save time and money using DoNotPay. Here are some of the other product series which will offer you even more ways to save using DoNotPay.

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