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What is Personal Bankruptcy?

Personal bankruptcy can provide great relief to people facing financial problems. Prior to filing for bankruptcy, a debtor should understand the complete procedure of filing for bankruptcy. A debtor should also assess his financial condition before deciding whether Chapter 7 or Chapter 13 bankruptcy will be suitable for him. He should know the cost of filing for bankruptcy. There are several costs like submission costs, attorney costs, court fees and trustee fees. If the court conducts any meeting on behalf of the debtor, the cost is borne by the debtor. So a debtor should seriously consider the costs before filing for bankruptcy.

A debtor should only think about filing bankruptcy when he is left with no other option. The main reason for this is that his future loans and credit depends on his action. When it is feasible to clear off debts without filing for bankruptcy, approach a credit counselor to discuss if there are other options that can make you debt free. Alternatively, you can also qualify for a debt relief program and avoid this complex process. If the debtor has plans to buy a home or car in future after he has filed for bankruptcy, he may get a loan at a very high interest rate. So, a debtor should proceed with bankruptcy after carefully assessing the consequences of filing bankruptcy.

Bankruptcy is a legal process that can be applied in different ways. One way is filing for Chapter 7 bankruptcy, which is the most common type of bankruptcy. The debtor surrenders his assets to a court appointed trustee. Thereafter, the assets are liquidated to pay off creditors. As far as filing for Chapter 7 bankruptcy is concerned there are variations and it differs from one state to another. A debtor is required to file for bankruptcy in the state where
he resides.

There is another way, where the debtor wants to keep the property with him and he has regular income. He is also in a position to pay a minimum amount to the creditors. For that, a debtor should have a payment plan and get approval from the trustee. This is called Chapter 13 bankruptcy.

However, if a person applies for personal bankruptcy, he can avoid harassments from the collection agencies. A debtor should start working towards improving his credit again. And if he maintains good credit he can qualify for FHA (Federal Housing Administration) mortgage or VA(Veteran Administration) mortgage after 2 or 3 years.

If you don’t wish to go for FHA(Federal Housing Administration)mortgage or VA(Veteran Administration)mortgage then bad credit loans could be an good option after filing bankruptcy to assist the consumers to fulfill their current financial need.

For more information

Bankruptcy Ahead – Personal bankruptcy information blog for those who need to learn about chapter 7 and chapter 13 and the bankruptcy process before making the decision to file bankruptcy alone.

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