Taking the leap and filing for bankruptcy can be a frightening thing, especially if one is not sure what to expect. Michigan residents who think that this form of debt relief may be their best bet do not have to go through it with little understanding as to what is going on. This week's column will go over a few things to expect during the process, and an experienced bankruptcy law attorney can provide even more detailed information on the matter.
The first matter to be discussed is when to file for bankruptcy. There is never a perfect time to do it. Before going this route, though, it is suggested that one try to reduce debt first by trying to work something out with creditors. This, one can do alone or with the assistance of legal counsel. If that proves ineffective and debts are too much to get out of on one's current income, then bankruptcy may be the best option.
The next matter to be discussed is choosing a bankruptcy type. There are two kinds of bankruptcy used for personal purposes: Chapter 7 and Chapter 13. A Chapter 7 is for those with little to no income that, if approved, will result in the immediate discharging of certain debts. A Chapter 13 bankruptcy, on the other hand, is for those with fairly sufficient income but too much debt. If this type of petition receives approval, an affordable payment schedule will be put into action, allowing the petitioner time to pay off most or all of his or her debts over a three- to five-year period.
Finally, there are both good and bad consequences to filing for bankruptcy. The good is that relief may be achieved. The bad is that it can negatively affect one's credit rating for some time. A bankruptcy law attorney can help Michigan residents determine if the good outweighs the bad in order to figure out if bankruptcy really is right for them.
Source: refinery29.com, "What Really Happens When You File For Bankruptcy?", Judith Ohikuare, March 9, 2018