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Thinking about making a fresh start? Discover everything you need to know about the different types of personal bankruptcy and small business bankruptcy.
Are you considering bankruptcy? If you've found yourself on the receiving end of non-stop calls from lenders and debt collection services, declaring bankruptcy might have crossed your mind at least once For those who are simply unable to make their monthly payments, personal or corporate bankruptcy may seem like a solution to those problems.
While bankruptcy procedures and laws were put into place to help protect people and businesses from certain creditors, and to provide the time needed to get either your personal or business accounts in order, there are serious drawbacks to consider.
Declaring bankruptcy might sound like an ideal solution, but, as with any major decision, there are important considerations you should keep in mind when considering this type of debt solution.
One of the issues you should consider is that, when declaring bankruptcy, all of your assets and liabilities are publicly disclosed. This could lead to more stress for you and your family (possibly your employees, if you're declaring corporate bankruptcy).
Also, the costs of filing for bankruptcy can sometimes outweigh the benefits as expert legal advice is needed to make sure that that the requirements of law are met. Adding to the complexity, certain forms of bankruptcy can be used by both individuals and businesses.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has made it more difficult for consumers to qualify for these protections, specifically Chapter 7 (this is the form of bankruptcy that consumers - and sometimes businesses - typically use to eliminate debt). A person has to satisfy a means test, be at the median income level, and have received credit counseling. On the last requirement, not only must someone who wants to file for bankruptcy get credit counseling, it has to be within a specific time frame and from a government-approved company. On top of all that, a debtor education course has to be completed.
If you are thinking about Chapter 13 protection (a type that both consumers and businesses can use), a confirmation hearing is required. This means that a court will review your finances and the payment plan you come up with to settle your debts, and the court decides whether to approve the plan based on how it measures up against the Bankruptcy Code. If it's approved, a court order is issued to your creditors.
The changes in law alone are confusing enough, but there are additional questions, such as should you even file for bankruptcy? If so, as an individual would you qualify for Chapter 7 bankruptcy? Is declaring Chapter 13 the more appropriate route for you? If you are a business owner facing insolvency, you have even more forms of bankruptcy to consider, such as Chapter 9, Chapter 11, and, depending on where your business is based, Chapter 15.
Knowing the full financial impact of filing for bankruptcy (including the short-term and long-term effects on your credit report and score) means that you need an experienced partner to help you go over all of your options. Whether you're considering bankruptcy as an individual or as a business, it may be that bankruptcy may not be the right solution for you at all. The right information can help you decide if it is or what your next, better option might be.
Filing for bankruptcy leads to legal costs that might exceed the debt you currently have. It also affects your credit in the longer term as it can remain on your credit report for seven years (if you file for Chapter 13 protections) or ten years (if you file for Chapter 7). Additionally, you may lose some of your property as it's sold off to pay down your debt or repossessed by your creditors. You should keep in mind that bankruptcy doesn't cover all debts. If you owe child support or spousal support, or have tax debts, that obligation won't be wiped out by declaring bankruptcy.
Your Bankruptcy Options
Despite the potential embarrassment that comes from missing payments and from finding yourself under a mountain of debt that you cannot see your way out of, talking to a professional is the best way for you to determine what the right course of action is for you and your finances. AmOne's team of trained financial search specialists work with you, one on one, and we keep your information secure and confidential. We walk you through your options, including bankruptcy solutions when appropriate, and connect you with knowledgeable and trusted partners who have been used and reviewed by people in your situation.
If you want to learn more about bankruptcy, or if you feel it's the best solution for your financial situation, call us toll-free at 1-800-781-5187 for a free consultation with an AmOne representative. We'll quickly help you locate, for free, the ideal program and company for your circumstances.