Facing mountains of debt can be a terrifying reality, and if you are in a position in your life where you have no other options, filing for bankruptcy may seem like the best choice. While bankruptcy certainly can benefit many financially devastated individuals, providing them with the economic relief they need, filing for bankruptcy is a very serious undertaking. Here are eight things you should know about declaring bankruptcy in Peabody–
1. You Cannot Escape All Debts
Many people assume that by filing for bankruptcy, they will be given a clean slate and all of their debts will be forgiven. However, this is not the case – not all debts can be discharged, including student loan debts, tax liens, child support or alimony debts, and any fines or penalties you owe for civil or criminal charges.
2. Filing for Bankruptcy Is Public
Before you file for bankruptcy, be sure to consider the fact that once you file, your bankruptcy record will be public. This means that anyone who wants to take a peek at your finances will be able to.
3. There Are Multiple Types of Bankruptcy
Discussing the different types of bankruptcy with a professional before filing is important. For individuals, Chapter 7 and Chapter 13 bankruptcy are the two ways of filing for bankruptcy, but both are very different. Further, there are certain requirements and limits for being able to file for each bankruptcy type.
4. Bankruptcy Can Help You Keep Your Home
If you are facing foreclosure on your home, filing for bankruptcy may help you be able to keep it. Under Chapter 13 bankruptcy, there are more flexible exemptions, which means that it is more likely you will be able to keep your home. Further, under Chapter 13 bankruptcy a payment plan is created to help you pay back debts over the next few years, and in exchange you get to keep property such as a home or car.
5. Filing Will Affect Your Credit
Filing for bankruptcy will have a significant and negative effect on your credit, which means that if you are thinking about applying for credit or taking out a loan in the next few years, your ability to do so may be significantly hindered by bankruptcy filing.
6. Filing For Bankruptcy Initiates the Automatic Stay
If you are drowning in debt and need immediate relief, filing for bankruptcy can prove helpful as it initiates the automatic stay. The automatic stay begins at the moment the petition for bankruptcy is filed, and puts a hold on most creditors’ ability to collect debts. This can stall the debt collection and foreclosure process, providing you with much needed time to get organized and plan your next move.
7. Bankruptcy Isn’t Free
It might seem ludicrous to think that someone who is facing huge amounts of debt would incur an additional cost during the process of trying to manage that debt, but the fact is that bankruptcy is not a free process. In addition to a lawyer’s fee, you will also need to pay bankruptcy filing fees.
8. Working with a Bankruptcy Lawyer Is Helpful
If you are thinking about filing for bankruptcy, you should consult with an attorney before you initiate the process. An experienced attorney can review your financial situation and help you to determine whether or not bankruptcy filing is the best option moving forward. If it is, your attorney will guide you through the filing process, understanding the different types of bankruptcy, and learning more about what debts can be discharged and what you should expect.
At the Law Offices of Jason C. Matalas, P.C., our Peabody bankruptcy attorney is experienced and knowledgeable in bankruptcy law. To schedule a consultation with Jason C. Matalas today, please call (978) 304-2888 now, or request a free consultation by sending us a message.