A person who has overwhelming debts should try debt consolidation before filing for bankruptcy. Consolidating bad debts with the help of a debt consolidation company will alleviate one from having to deal with debt collection agencies and create a plan whereby one can pay back a portion of what is owed. Typically, a person only has to pay back between 15% and 25% of the original debt; the rest is written off by the creditors under the debt consolidation agreement. However, debt consolidation is not always feasible and in such an instance, declaring bankruptcy is the best option.
While a person filing bankruptcy can do so without professional legal help, hiring a bankruptcy attorney is always a good idea. The attorney does not need to be the most expensive attorney in town, but he or she should be competent and experienced. If the reason for declaring bankruptcy stems from the fact that alimony has not been paid, then consulting a divorce lawyer may also be a good idea.
The first thing that a bankruptcy attorney will do is determine whether one should file for 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 persons creditors and their lawyers will also be present. The court appointed mediator will ask one questions regarding his or her assets and will determine which ones can be kept and which ones must be sold to repay creditors.
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. Student loans are very difficult to discharge under bankruptcy, although it can be done.
Bankruptcy is not the only way to deal with financial insolvency, but it is a good option and one that should be seriously considered. Debt consolidation is often the best initial option, but not always. In many cases, declaring personal bankruptcy is the best course of action. Anyone declaring personal bankruptcy should start by finding and retaining a good bankruptcy lawyer to help him or her successfully declare bankruptcy and discharge all debts under these proceedings.
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This entry was posted in Uncategorized and tagged law, legal advice. Bookmark the permalink.Source: http://www.solutionfinder.org.uk/filing-for-bankruptcy-tips-and-advice/
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