Choosing To Change Your Finances

6 Basic Facts To Understand About Bankruptcy

by Luis Hawkins

If your debt keeps rising each month and you cannot pay your bills because you have too much debt, you might want to visit a bankruptcy lawyer. Bankruptcy attorneys help people who need financial relief, and they might be able to help you. Before you visit a lawyer, it might help to understand some basic facts about bankruptcy. Here are six that you should learn.

1. You Have to Pay for It

Filing for bankruptcy is not free. You must pay a filing fee for your case, and you must pay the legal fees your attorney charges. Some people qualify for financial assistance for their filing fees. If you need assistance paying your fees, talk to your attorney.

2. You Have Options

When people file for bankruptcy, an attorney helps them decide which branch to use. Chapter 7 and Chapter 13 are the two common branches. You might qualify for one of these or both, but your lawyer will help you determine which branch to use.

3. You Can Lose Assets

The third fact to know is that you can lose assets through bankruptcy, but this typically happens only in Chapter 7 cases. Chapter 13 requires repayment of the debt, and the positive side of this is that you typically will not lose any assets. Chapter 7 provides a discharge of debt and might require surrendering things you own.

4. You Will Have to Take Classes

The next fact to understand is that filing for bankruptcy requires taking credit counseling classes. You must take these classes when filing for any branch of bankruptcy. These courses teach you many things, including how to create a budget.

5. Married People Can File Together or Independently

It is also vital to know that you can file with your spouse or alone if you are married. Married people do not have to file together if they would rather file alone. Ask your lawyer which option would be best for you before deciding.

6. Bankruptcy Might Harm Your Credit

The last thing to know is that filing for bankruptcy could harm your credit. Fortunately, the harm is temporary. With the right steps and work, you can gradually improve your credit score. Within a couple of years, you might have better credit than you had before filing.

If you are interested in learning more about these facts or other facts about bankruptcy, contact a bankruptcy attorney today.