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Posted by: Maricopa Lawyers on Apr 14, 2013

What are your options when you file for bankruptcy? Many people don’t approach bankruptcy with a full understanding of their full range of possibilities. Researching your financial options prior to filing for bankruptcy, in addition to speaking with a qualified bankruptcy representative, will ensure you can identify the correct course of action for your immediate future.

Filing for Chapter 7 bankruptcy will generally require that you sell off personal assets to pay back creditors. Chapter 7 bankruptcy is tailored toward settling the majority of your debt with a few exceptions. Debts that are exempt from bankruptcy include child support, alimony and student loans. Filing for Chapter 7 requires passing a “means test” in order to prove you cannot pay your debt. Chapter 13 bankruptcy restructures debt, occasionally allowing you to secure your major assets in the process.

Filing for bankruptcy is an expensive process. On average, the cost for filing Chapter 7 bankruptcy protection can exceed $1500. Chapter 13 bankruptcy protection will run slightly less expensive, ranging upwards to $1000. There are some associated fees in filing for bankruptcy, including federal court costs and credit counseling. While some people choose to avoid legal representation in their bankruptcy case in order to cut cost, they face a much higher risk of having their bankruptcy case dismissed in court.

Your credit rating will be significantly impacted. No matter whether you file for Chapter 7 or Chapter 13 bankruptcy, filing will affect your credit scores for nearly a decade. Although you can apply for new credit throughout this period of time, the interest rates will generally run much higher on average. Many people don’t realize their credit rating will be negatively impacted even in cases where their filing is dismissed.

Know the facts about bankruptcy prior to filing. Speak with a qualified legal representative for a better understanding of your bankruptcy case.