It is that time of year again, time to file bankruptcy.
When taxes start coming in, most people that are going to file, go ahead and do so now. Now, there are some basic things you need to know if you are thinking about filing and some things you will need to get together.
First, the law used to be different than it is now. It used to be that you had to file a Chapter 13 in order to keep your house or your car, now you can file a Chapter 7 and keep your house and your car, if you qualify.
A Chapter 13 is where you put all the debt together and then make a monthly payment. How much that payment is going to be is something that that attorney and you work out before you file your bankruptcy. That amount can be changed by the court, but you still have to ok that amount, so you won’t be paying more than you are able to while the Chapter 13 is going on. That amount can change while you are in the Chapter 13, and will change, based on job loss, a raise, etc. The Chapter 13 generally goes on for 5 years.
As you can keep your house and your car, generally, in a Chapter 7, the only reasons to file a Chapter 13 are 1. You filed a Chapter 7 in the last 8 years or 2. You make too much money per month to quality for a Chapter 7 (again in general).
A Chapter 7 allows you to wipe all your debt out, other than what you want to keep AND student loans, child support, taxes and an intentional act (like an accident related to drunk driving). If you otherwise quality for a Chapter 7, we would always suggest that as you are allowed to start fresh (with the exceptions listed above) and you can then move on with the rest of your life.
Both types of bankruptcy stay on your credit for 10 years from when they are finished. So, for a Chapter 13, that is 15 years from the date you file and for a Chapter 7, is it ten years from when you file.
Before you file you should go ahead and gather some of your paperwork together. Things like, 6 months of bank statements, 6 months of paystubs, last two years tax returns, loan papers, car tittles, lawsuits, garnishments, etc. You will also have to do a credit counseling class, generally online, before and after you file.
GARNISHMENTS cannot be stopped until the case is actually filed, so the sooner you get all your documents together and pay the attorney, the sooner everything can get taken care of.
This is some basic information, and there are exceptions to most of this, which is why you need an attorney who has been practicing this type of law for a decade.