Massive debts will become more and more overwhelming with time. You may ask yourself whether it is worth trying to keep up with it. Filing for bankruptcy in California may become quite an attractive option. However, bankruptcy comes with as many consequences as it does protections. You should really think long and hard before deciding to file for bankruptcy in any state.
What Type Of Bankruptcy Are You Likely To Qualify For?
Chapter 7 and Chapter 13 are the two most common forms of bankruptcy petitions. Chapter 7 enables you to completely wipe your debt slate clean. Chapter 13 forces you to continue to make payments to creditors over time. Most courts are going to force you to file for Chapter 13 thanks to the new bankruptcy laws with the help of the major credit card banks.
The reason for this is Chapter 7 bankruptcy can be easily abused. What happens is all of your non-exempt assets are liquidated to pay off your outstanding debts. Creditors often claim that debtors could afford to pay their debts if given a chance to simply restructure their debt. Only if you believe you can pass the means test should you consider talking with a California bankruptcy attorney about a Chapter 7 bankruptcy filing.
Chapter 13 bankruptcy forces a debtor to make payments equal to the market value of all secured debts. Say your car was worth $10,000 on the market. If you have already paid $4,000 on the loan, you may still be on the hook for the remaining $6,000. You are generally required to make payments over a two or three year period. Is bankruptcy worth it if you cannot really get out of paying your debt?
Can I Deal With The Credit Issues That Follow A Bankruptcy
A bankruptcy will stay on your credit report for the next seven years and in many cases 10 years. Anyone who looks at your credit report would be able to see that you filed for a bankruptcy in the past seven years. It could make getting a loan rather difficult if not impossible.
Unsecured lines of credit are going to be almost impossible to get immediately following a bankruptcy. Your best bet is to go with a secured line of credit. Paying off this secured line of credit on time will qualify you for unsecured credit cards later on.
You could luck out by finding a lender that is looking more at the fact you have less debt on your credit report. However, you will still have to pay a hefty interest rate in order to get the loan. Interest rates above 15 percent will be quite common in the first 12 months or so after a bankruptcy.
Is Bankruptcy My Only Option?
Credit card relief may very well be your best option to reorganize your debt. Creditors do not want you to go bankrupt. This gives you a lot of leverage when trying to negotiate a new deal. Throw out a low offer to see how little they are willing to take. You might get a better deal through the threat of bankruptcy as opposed to actually going bankrupt in CA.
Debt relief services are also a good option if you cannot take the creditor calls anymore. Never declare bankruptcy just to get them off your back. Going with a debt relief service will get the creditors calling them instead of you.
Avoiding bankruptcy also keeps your personal information private. You will have to open up all your financial information when you go to bankruptcy court. Is that any better than having creditors calling you everyday harassing you? Probably not.
Think carefully before actually filing for bankruptcy in California or in any state. You want to make sure you understand all the potential pitfalls before you go thought with it. There are other ways to get your creditors off your back beside going bankrupt. Chances are pretty good that it is not the best decision for you. Need more information about settling your debt? Call now to speak to a debt relief specialist today. Check out the only resource you need to finally solve your debt issue.