Before deciding when to claim bankruptcy, there are some things you should take into consideration. At the risk of stating the obvious, the act of claiming bankruptcy is a substantial financial commitment that should not be taken lightly. Before even considering how to claim bankruptcy, it’s important to consider all of the alternatives to bankruptcy that are available. We’re not saying that bankruptcy protection isn’t sometimes the best option, but that all available options need to be taken into consideration before taking the plunge. It may also make sense to take our free bankruptcy evaluation to gain a better understanding regarding whether or not bankruptcy is your best option.
Before beginning the process, it’s important to know that some significant changes have been made to the personal bankruptcy rules over the past several years. Due to a law passed by Congress in 2005, it is now more difficult for some individuals to claim bankruptcy, though it’s not impossible. Essentially, the law was enacted to ensure that not just anyone can file for bankruptcy. If you think you might need to resort to filing and want to know when to file for bankruptcy, it’s important that you’ve exhausted all of the alternatives; otherwise, claiming bankruptcy may be somewhat difficult.
When most people think of bankruptcy protection, they are actually considering a particular type of protection known as Chapter 7. This type of bankruptcy protection is meant to wipe your debt clean without the need for repayment. In order to quality for Chapter 7, you must first undergo an extensive process whereby bankruptcy claim forms and your financial records (income and expenses) are carefully scrutinized to ensure that you are in fact “under water” in terms of your finances. This check has been put into place to ensure that the Government does not grant bankruptcy protection to just anyone; the need must be substantiated through financial documentation. If you do not pass the criteria to qualify for Chapter 7 protection, you will need to file under Chapter 13, which means that you will be placed under a mandatory repayment plan for at least 3-5 years.
Obviously, before submitting a bankruptcy claim, you should understand that the act of declaring bankruptcy will have a dramatic impact on your credit rating for several years after the filing has been initiated, making it difficult for you to get an unsecured credit card after bankruptcy. While life after bankruptcy Chapter 13 and 7 does exist, seeing yourself through the process can be one of the most mentally and emotionally trying experiences of your lifetime. Some benefit can be gained by filing your claim through a reputable bankruptcy service company, of which there are many online. For more information on how to claim bankruptcy and for a free bankruptcy evaluation, please feel free to browse our comprehensive site. We also have information on how to claim bankruptcy for free and how to claim bankruptcy without a lawyer.
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