Over the next couple years, Americans are going to hear a lot about filing bankruptcy. It's inevitable for this to happen because of the continued downward spiral of our economy. Many people are trying to hang on and avoid filing for bankruptcy, thinking that that job might be right around the corner or because they still have a little bit left in their savings to pay their bills. This is the time that individuals in financial distress should be planning their future. The first step to planning is being realistic.
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A person that has their credit cards tapped out and continuing to make the minimum payments should take a serious look at that now and not for what they're hoping to happen in the future. If the debtor is unemployed, they honestly can't guarantee that that great paying job is just around the corner. If the word bankruptcy is even in the back of someone's mind, they should start saving and budgeting so they can be ready to file for bankruptcy. Filing bankruptcy is not free, there are filing fees which run around $300 for a Chapter 7 bankruptcy and then there is a credit counseling and financial management course that is required by the court that cost about 50 bucks a piece.
This is not including a bankruptcy attorney, which depending on the complexity of the case can vary drastically. It's not a good idea to try and do it yourself as filing for bankruptcy has added a new complexity with the code changes over the last few years. The cost of a bankruptcy attorney can be considered a value, depending on the amount of debt that is being discharged and considering the amount of property that needs to be protected through exemptions.
Timing is everything when it comes to filing for bankruptcy. That's why a person experiencing crushing debt should consult a bankruptcy attorney as quickly as possible. Sometimes the bankruptcy attorney will want to postpone the filing for the debtor to get the maximum amount of benefit of the bankruptcy. Hiring a bankruptcy attorney will allow the debtor to ask questions to decide on what chapter of bankruptcy to file and when to file. Since the bankruptcy code changed in 2005, there is an addition of a means test that's required to qualify to file Chapter 7 bankruptcy.
Some debtor's income is loaded toward one part of the year, for example; a realtor might get a commission of $50,000 in January and not make anything else for the rest of the year. If they tried to file bankruptcy in February, the $50,000 would be included in the six month look back timeframe for qualification. Depending on the area the debtor lives in, they might not qualify to file Chapter 7 bankruptcy. A bankruptcy attorney would be able to determine based on the facts to push the bankruptcy filing out past the look back and the debtor will now qualify to file bankruptcy.
The bankruptcy attorney will also advise the debtor on when to stop paying their bills. Many attorneys believe if you are filing bankruptcy, you should hang on to the money and not pay your bills because they will be discharged in bankruptcy anyways. Having the help from a professional will calm the fears from the threats of the creditors. Having this layer of protection, allows the debtor to live again.
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