If you owe an overwhelming amount of money that you can’t pay down, it may be in your best interest to consult with a bankruptcy attorney to determine the right course for your financial situation. Residents in and around Bullhead City, AZ, turn to the team at Knochel Law Offices, PC, for the quality counsel and legal guidance they need on the topic. If you’re seeking debt relief, they share some factors to consider before filing.
What to Know Before Declaring Bankruptcy
1. There’s More Than One Type of Bankruptcy
Individuals may choose between two basic options when petitioning for bankruptcy. A Chapter 7 filing is known as liquidation bankruptcy, which may require you to sell your nonexempt assets to pay back creditors. It will discharge most debts, but you will have to pass a means test to show you don’t bring in more than your state’s average income. A Chapter 13 filing helps reorganize your finances and involves creating a repayment plan over a specified period.
2. Bankruptcy Doesn’t Automatically Eliminate All Debt
Your bankruptcy attorney will warn you that filing won’t necessarily eliminate all your debt. It only allows you to get rid of unsecured debt. As such, you will still be responsible for paying any secured ones you owe, including student loans, child support, alimony, taxes, and real estate liens. Also, if your creditors dispute the bankruptcy, you will be ordered to pay them back if they win.
3. You Will Need to Rebuild Your Credit After Filing
Once your debts are discharged, you will have a clean slate. However, since bankruptcy is likely to take a significant toll on your score, it’s crucial to start working on rebuilding your credit right away. Get a secured credit card that you pay off each month or become an authorized user on someone else’s account. Continue to pay your remaining bills on time and closely monitor your credit report for errors.
Declaring bankruptcy will give you the opportunity to gain a fresh start with your finances, but it’s not something to rush into. Speak with a bankruptcy attorney at Knochel Law Offices, PC, before filing to ensure you make an informed decision. They’ll discuss your financial situation, your best interests, and guide you through every step of the process. Call (928) 444-1000 to set up a consultation with a bankruptcy attorney today, or visit their website for more details on how they can help you achieve financial freedom.