If you’re thinking about filing for bankruptcy, it’s probably because debt has piled up, and you now owe more money than you’re able to repay.
Of course, it does have its limitations, and you should think carefully about whether the benefits of declaring bankruptcy outweigh the very real downsides. Here are some of the basics you need to know about the process.
What is Bankruptcy?
Bankruptcy is a legal proceeding handled in federal Bankruptcy Court that may allow you to be forgiven of debts you can’t pay, while setting up a plan to pay other creditors at least some of what you owe.
A federal bankruptcy judge will make the decision on your case based on the facts presented, not only on your behalf, but by your creditors, who have the opportunity to object in court.
However, it doesn’t matter if you got into debt due to bad luck or bad decisions. If your request for bankruptcy is approved, at the end of the process, after you’ve completed any payment plans and met all the terms of the bankruptcy agreement, your remaining debts will be discharged.
A bankruptcy will stay on your credit report for up to 10 years, making it a decision that should be carefully considered. In general, it may be worth pursuing bankruptcy if it would take longer than five years to pay off your total current debt. (altro…)