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A “Cliff Notes” Version of Filing for Bankruptcy | Financial Planning Tips

A “Cliff Notes” Version of Filing for Bankruptcy

If you are filing for bankruptcy, you have a lot on your plate.

It is so much easier when things are broken down for you to understand; what procedures, which forms, and which chapter are you classified under.  You can hire someone to answer those questions, and they will likely walk you through all of that.  But if you would like to go into your bankruptcy filing appointment with an understanding, then here are a few basic answers to your questions.

Bankruptcy Overview:

Not all debts will be cleared away when you file for bankruptcy.  If you have questions about what options you have, you may want to consult with a lawyer, as they will be able to assist you in answering what bills will remain active or what property stands to be lost.  Filing for Bankruptcy in Utah is permissible to wipe away any outstanding balances except for the following:

  • School loans
  • Car loans (if you are going to try to keep the car)
  • Alimony or Child Support Payments
  • Wages owed to individuals for work performed
  • Damages from DUI
  • Taxes or other Government debts

Chapters of Bankruptcy Broken Down:

There are different types of chapters you can file under.  Understanding which is which can prove to be a mess unless you can break down what the minor differences are or how you qualify under those umbrellas.  Understanding  bankruptcy requirements, and how those work together can make the difference in success for you.

  • Chapter 7: This is a liquidation of your assets.  Meaning by filing for Chapter 7, you give rights and permissions for the bank to sell your assets and with the money made, pay off creditors.  To be permitted to file for this, you must make less than a certain yearly salary.  This can be done only every 6 years.
  • Chapter 11: This is a court order reorganization or your business.  You remain in control of your assets, but you provided limited time to try to work out your organization and pay off your creditors.  Typically this is for corporations rather than individuals.
  • Chapter 12:  Another reorganization of funds, for individuals.  This is another form of filing where you are allowed to keep your assets; but you set up a payment plan with your creditors.  You need to have a scheduled way to pay them back.
  • Chapter 13: This is determined and filed for by bankruptcy attorneys.  This is very similar to Chapter 11, but set for individuals.  You are required to pay off debts during a period of 3-5 years.  There are limits to the amount you owe, and what debts you have incurred.  Check with your legal specialist with questions about filing for this.

Finding a Lawyer to Help:

The best way to handle a bankruptcy is to hire out a helper!  Hiring a lawyer is going to give you specialized knowledge of this industry.  Their fees are generally reasonable because they understand the predicament that you are facing.

When considering hiring out your legal needs to someone with know-how, these are the general rules of thumb for you to follow:

  • Find a lawyer you are comfortable with.  You need to feel like you can ask questions and they need to be able to answer you clearly.
  • Select a lawyer who specializes in bankruptcy.  They will have a clear understanding of the laws, route-a-rounds, and various aspects of any requirements.  You need someone who has the bankruptcy requirements down pact.
  • Make sure they have explained all of your options; don’t let them talk you into something you are not comfortable with.
  • Be ready to shop around; you can interview them.  Get to know them and ask how they would handle your case.  All of your information is private, so there is no harm in getting to know and find the right fit for legal assistance.

Overall, when you think that bankruptcy is the only option, you are going to need someone there to guide you through the next steps.  Ensure that you are in good hands when you are working with a legal team; have them really stand up for you.  File under the correct chapter of bankruptcy laws and ensure that you can move forward with the new requirements.

Finance independence and freedom is liberating!  Choose today to get help and become legally free from financial stress.

This is a Guest Post by Lacie Christensen who rights on a wide variety of financial topics, including local bankruptcy like Bankruptcy, Utah or other state based bankruptcy issues.

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