We’ve all had debts either from friends, family or financial institutions. If you get yourself into so much debt that your income cannot manage to service the same, you might need to file for bankruptcy. It is an unfortunate situation that no one would like to find themselves in, but there are those times when you simply don’t have a way out.
However, you may want to seek advice before deciding to file for bankruptcy. An experienced lawyer such as David M. Offen can help you go through a smooth bankruptcy procedure. Search the internet for Bankruptcy lawyers Philadelphia and you will find his law firm among the top ones. Even as you engage a lawyer, here are a few things you need to know before you file for bankruptcy.
1. Identify Which Type of Bankruptcy to File
There are various types of bankruptcy that you can file. These depend on your current financial situation and your level of income. Liquidation bankruptcy discharges you of most of your unsecured debts. However, it is not as easy as it sounds as you need to pass a test called the “means test” to liquidate your non-exempt assets.
You must also declare your income, for the court to decide whether to exempt you or not. No tall qualify for this type of bankruptcy but do not fret, as there are others to consider. The other type is the “reorganization” bankruptcy. In this type of bankruptcy, you will have to accept a repayment plan where you remit a specified amount of money to your creditors over a predefined period.
You must have a regular income to qualify for this, and your assets won’t be sold. A good lawyer should be in a position to advise you on the best option.
2. You Have to Make a Public Declaration
If you are a private person, filing for bankruptcy will not go well with you. The paperwork required to complete this process will require you to give out a lot of personal information to different people.
In some cases, you may be subjected to a bankruptcy proceeding. So, if you want to keep your financial information private, then you’ll need to find another means of salvaging yourself.
3. You Still Need to Pay for the Process
Yes, you are broke, but you still need to part with some money to go through this process. You need to pay attorney fees, and might be required to submit your credit cards. The court will limit you on what you can and cannot spend on.
Attorney fees can be a flat rate or a percentage of your debt. In some cases, these fees can be added to your debt and be required to clear it first before going through the process.
4. Not All Debts are Discharged
Filing for bankruptcy does not in any way mean escaping from your financial obligations. There are those debts that cannot be discharged, and you must find a way of paying them.
For instance, child support and back taxes must be cleared. Bankruptcy only works to ease your loan burdens for sometime before you can find another meaningful source of income. Just keep it in mind that it is not an avenue of escaping your debts.