With so many people facing foreclosure and insurmountable debt, bankruptcy filings are rising. Bankruptcy is often the last resort for many people in debt. Many people find themselves in this situation due to excessive medical bills, loss of employment, or another unforeseen event. Before filing for bankruptcy you should learn your options and determine with the advice of an experienced bankruptcy attorney what your course of action should be.
Filing Bankruptcy
Filing bankruptcy is not as easy as some people would think. When filing for bankruptcy you will have to go in front of a bankruptcy trustee or judge and explain to them how you ended up in this position. You will also have to give the court a list of your assets. Your assets are classified as exempt and non-exempt assets. Exempt assets cannot be used to repay your debt. While non-exempt assets can be seized and sold to repay your debt. In addition, you will have to present the court with your list of debts. They are also classified as secured and non-secured. A secured debt is something backed by collateral such as your house.
Your bankruptcy attorney will help you determine whether you should file a Chapter 7 or Chapter 13 Bankruptcy Petition. In Chapter 7 bankruptcy you are allowed to keep the exempt assets and your unsecured debt is dismissed. Your non-exempt assets are sold to repay your debts. Many people choose to file Chapter 13 bankruptcy in order to keep their non-exempt assets.
How to Avoid Bankruptcy
Before filing for bankruptcy you should try every other avenue to reduce your debt. You should begin by selling your assets. You can try to sell your house and move to a smaller house and downsize your vehicles. Another step to helping reduce your debt would be to try to work more. This is not always as easy as it sounds, but it is worth the effort. You should also consult with credit counseling agencies or look into debt consolidation or settlement. Communicating with your creditors is very important many will agree to a portion of your debt in lieu of you filing for bankruptcy.
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