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Louisville Bankruptcy Blog

Understanding the Chapter 13 bankruptcy filing process

If you are dealing with overwhelming debts, you have probably looked into all of the possible debt relief options available to you. Many debtors arrive at the conclusion that filing for bankruptcy is the best way to ensure a debt-free life in the long term. However, they are often confused about which chapter they should file for and what the process involves.

If you are considering filing for Chapter 13 bankruptcy, it is important that you look into what the process entails. Chapter 13 bankruptcy tends to require an investment of time in comparison to other chapters; however, this proves to be worthwhile for many.

Think twice before accepting these bankruptcy myths

Filing for bankruptcy is never something that people do willingly. It requires that debtors accept the financial trouble that they have found themselves in, and take radical action to work toward a debt-free life. While this is never an easy choice to make, it is often made harder by widely spread myths about bankruptcy.

When considering whether to file for bankruptcy, it is important to apply critical thinking to the situation and consider whether some of the things you have been told are really true. The following are some of the most commonly spread myths about the bankruptcy process.

New rules may give creditors more access to your life

Right now, there are limits on how often creditors can contact you to demand payment -- and by what methods. Legitimate debt collection companies know they have to abide by these limits and that there are stiff penalties for crossing them. They can even be sued by the debtors they're trying to collect from if they go too far over the line.

Well, under new rules proposed by the federal government, those lines may get a lot blurrier and the consequences a lot less imposing when it comes to what constitutes creditor harassment.

Key considerations before filing for Chapter 7 bankruptcy

If you are struggling with a high amount of debt, you may have already read about the potential benefits of filing for Chapter 7 bankruptcy. This bankruptcy filing can be particularly beneficial for those who have a low income and a high amount of debts.

However, every type of bankruptcy chapter comes with limitations. This is why it is important to consider every aspect of a bankruptcy chapter before making the decision to commit. The following are some key things to consider before filing for Chapter 7 bankruptcy.

How can a monthly payment plan be beneficial in bankruptcy?

It is very common for people to get into debt because they have challenges in the way that they manage their cash flow. Perhaps the complexity of your finances has meant that you are having trouble budgeting effectively and controlling your outgoings. These problems can make falling into debt very easy.

One of the ways that Chapter 13 bankruptcy can help debtors is by helping them to create a payment plan that, when followed, can successfully repay the debt that they owe over a period of time.

How can I cope emotionally with a bankruptcy?

Struggling financially not only affects your wallet, but it can have consequences for your mental health. Spending all of your emotional energy worrying about money can mean that you will be less emotionally available for your partner and children, or other loved ones.

If you are considering taking action to combat your debt by filing for bankruptcy, it is important to understand how this could affect your mental health. By being aware of the challenges of bankruptcy, you will be better equipped to take on the task.

Don't make these mistakes before filing for bankruptcy

Before you file for bankruptcy, there are a few things you should know. Because each case is different, there might be other points for you to think about than these. The dos and don'ts of bankruptcy start before you even file your case.

If you have been making payments to creditors, find out if you should continue making those payments. Don't make any large or unusual payments if you are planning to file bankruptcy. Payments that aren't in the norm of what you've been doing might be considered preferential transfers, which can cause problems for the creditor later.

You have rights and responsibilities in a Chapter 7 bankruptcy

When you don't have a lot of assets and only a limited income but are drowning in debt, you might decide that you are going to file for bankruptcy. More than likely, you will qualify to file a Chapter 7. This requires that you pass the means test. Once you meet it and take care of the education requirements for filing, you will be able to get your case moving forward.

In a Chapter 7 bankruptcy, any nonexempt assets you have are liquidated by the bankruptcy trustee. You won't have to make a repayment plan, but the remaining balances on accounts will be written off when your case is discharged. You should ensure that you are being fully transparent when you fill out your paperwork.

How can you keep your car if you are behind on payments?

Most people understand it is important to live within your means. Yet, for many Americans, that includes financing a vehicle with affordable monthly payments. However, considering unforeseen expenses and changes in income, things happen.

If you are in debt, struggling to make your car payments, you are not alone. Despite low unemployment rates, 7 million Americans are at least 90 days behind on their car loan payments. Knowing others are in similar situations can provide some comfort. However, if you are struggling, you may have concerns about how long you can keep your car from being repossessed.

Benefits to bankruptcy's 'automatic stay'

Reclaiming your financial security is one of the most common reasons why people opt to file for bankruptcy. There are other benefits that occur when you file. One of these is the automatic stay. Many people who file bankruptcy find this order to be one of the most pleasant things that happens when their case is started.

The automatic stay means that creditors can't try to collect money from you. They can't call you to ask about payments or send you mail to try to collect. This means that you can answer your phone or head to the mailbox without having to fear what's there.

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