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What One should Know About Filing for Bankruptcy

A person who has overwhelming debts should try debt consolidation before filing for bankruptcy. Debt consolidation involves making a payment plan with the assistance of a debt consolidation company; the money is then paid to creditors via the consolidation company. Once such a plan is drawn up, creditors and debt collection agencies are not allowed to call a person regarding the debt. Under the terms of a consolidation agreement, one only has to pay back an average of fifteen to twenty five percent of what he or she originally owed. However, if debt consolidation is not a feasible option then a person should seriously consider filing bankruptcy.

A person who needs to declare bankruptcy will want to start by hiring a good bankruptcy attorney. Choose an attorney that is competent and experienced but also reasonably priced. In some cases one may also need to consult with a divorce lawyer if the bankruptcy is related to divorce proceedings, or if one owes alimony to a ex-spouse or is owed alimony by a ex-spouse.

A lawyer will advise a person whether he or she should file Chapter 7 or Chapter 13 bankruptcy. The attorney will then help one to fill out the necessary legal paperwork; a good attorney will also help a client to prepare for the court mediated meeting that will inevitably follow.
This meeting is important, as a person’s creditors and their lawyers will also be present. At this time, one will need to clearly declare what his or her assets are and the court mediator will determine which assets a person can keep and which must be sold off to pay bad debts.

Bankruptcy proceedings are relatively straightforward is creditors do not make formal objections. On the other hand, one or more creditors can request that a person declaring bankruptcy still be required to pay off some or all bad debts. In such an instance, the case will go to court and a judge will determine if a person should be released from the debts under bankruptcy or not.
A person declaring bankruptcy should realise that some debts will never be discharged under any form of bankruptcy. A person will need to pay any back taxes or legal fines that he or she owes, even if bankruptcy has been declared. A person who uses his or her credit card irresponsibly right before or right after declaring bankruptcy may still be required to pay the money that he or she owes. Certain types of loans may also not be discharged under bankruptcy proceedings.

Bankruptcy is not the only way to deal with financial insolvency, but it is a good option and one that should be seriously considered. If debt consolidation does not work, then one may find that declaring bankruptcy allows him or her to clear the slate and get on with his or her life. A person who wishes to declare bankruptcy should start by hiring a good bankruptcy attorney to help him or her file the proper paperwork and navigate the bankruptcy proceedings and all that they entail.

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