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What to Consider Before Filing for Bankruptcy

What to Consider Before Filing for Bankruptcy

Are you starting to have trouble paying your debts each month? Are you worried you might lose your home if you don’t get your financial affairs back on track? If you have been wondering whether bankruptcy is the right solution for your situation, then keep reading to find out what questions you need to answer before filing your bankruptcy case.

Assess Your Financial Situation

The first thing to do if you are considering bankruptcy is to make a list of all the debts you owe. You should also write down all sources of income you have and any assets you own that can be sold to pay your debts.

Which Bankruptcy Option Is Right for You?

Most people file for either Chapter 7 or Chapter 13 bankruptcy. With Chapter 7, you pay back your creditors with your nonexempt property. After that, your remaining debt will be discharged. People with unsecured debt for credit cards and medical bills tend to choose this option if they have little or no income.

With Chapter 13, you create a payment plan to repay your creditors. If you have a steady income that covers your basic living expenses, or if you want to avoid foreclosure on your home, then this option might be the one for you. To determine which bankruptcy you should file under, consult with an experienced lawyer.

Think About Your Credit Rating

When you file for bankruptcy, it will have a substantial impact on your credit score. A Chapter 7 bankruptcy will remain on your credit report for at least 10 years, while a Chapter 13 bankruptcy stays on the report for at least 7 years. This means you can potentially be denied credit for an entire decade.  

Although this may sound dreadful, bankruptcy also gives you the opportunity to rebuild your credit, as long as you are financially responsible. Sometimes it’s better to take the short term hit on your credit rating than to continue letting your debt accumulate.  

Do you need help deciding if bankruptcy is the best way for you to get out of debt? If so, contact our attorneys at Bach Law Offices, Inc. to request your free case evaluation. We are here to make sure you understand all of your options. Call (847) 448-0025 today.

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