Getting Your Chapter 7 Bankruptcy Questions Answered

Chapter 7 Bankruptcy Questions

· What are the different types of bankruptcies?

Chapter 7 bankruptcy applies both to individuals and businesses. In this case, the court will sell all non-exempt assets in order to pay your creditors. After that, irrespective of the amount paid, the debt will be discharged. Chapter 13bankruptcy, on the other hand, is typically used by wage earners and rather small businesses; this type of bankruptcy delays or reduces the amount of payments to creditors. Chapter 11 is designed by larger businesses and usually a Chapter 13 or Chapter 11 bankruptcy is preferable to a chapter 7.

· Which type of bankruptcy should I choose?

There is no straight answer to this question and every single case should be carefully analyzed, eventually with the help of an attorney. If you are socked with serious financial difficulties it is likely to prefer Chapter 7, also known as "straight bankruptcy". A Chapter 7 proceeding is filed by about 70% of all individuals filing bankruptcy petitions. It presents the advantage of being faster to complete and it is designed to give you a "fresh start". On the other hand, a Chapter 13 plan gives you a second chance if really want to pay off most or all your debts and you do have a steady income and a rather a stable job.

· How much does it cost to file Chapter 7 Bankruptcy?

You will be demanded to pay about $300 in order to file a Chapter 7 bankruptcy. Moreover a lawyer is needed and his fees may vary in the range of $1,000 to $2,000. The initial consultation is usually free and you can reduce the fees if you don't require tour attorney to attend the meeting of creditors, if this is allowed in your state.

· Will the creditors stop harassing you?

Once you have filed Chapter 7 bankruptcy the law clearly stipulates that creditors must stop any action against you including wage garnishees, lawsuits and even phone calls, emails or SMS messages demanding payments.

· What about credits? Will I be eligible for getting one?

The fact that you had filed a Chapter 7 or 13 Bankruptcy will be on your credit report for 10 years. Some banks will take in consideration your financial past, while others will pay more attention to your present income and economical situation. Only two years after a discharge, you will be eligible for mortgage loans on terms as convenient as those of others demander who have not previously filed Chapter 7 Bankruptcy. The most important for determine your eligibility will be the stability of your income along with the size of your down payment.

· What other alternatives to bankruptcy do I have?

On one hand, you can try to negotiate with creditors , in order to reduce or even to eliminate some payments. On the other hand, you may consider asking help from a nonprofit credit counseling group.

· What are the consequences of filing Chapter 7 or Chapter 13 bankruptcy?

Sometimes the creditors may take into consideration your financial past and a past bankruptcy influence them when deciding whether to extend credit. A person who has filed for bankruptcy is considered to be a higher credit risk and you may not get less favorable terms. You must count at least three years before you will be reestablished regarding credit rating.