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2 questions to ask before applying for bankruptcy

On Behalf of | May 6, 2024 | Bankruptcy

Have you been struggling to pay off credit cards, medical or loan bills? Do you have outstanding debt obligations? Are you suffering from late fees and high interest? If this is happening to you, then your best option may be to file for bankruptcy.

Bankruptcy is seen as a taboo subject, but it helps millions of people recover from their debt. Before applying for bankruptcy, you may want to ask the following questions:

1. What are my bankruptcy options?

You have several bankruptcy options. The first that many people choose is Chapter 7 bankruptcy. Many people call it liquidation bankruptcy because filers may need to liquidate some assets, although you can certainly apply to protect assets you want to keep.

Your other option is Chapter 13 bankruptcy, which may be your preferred choice if you have a high income and can pay some of your debts. If you file for Chapter 13 bankruptcy, you may be responsible for paying off some of your debt obligations for a few years. After which, your remaining debt obligations may be resolved.

2. What happens if I file for bankruptcy?

A successful filing can help you clear debts or at least get them under control. You will also get a reprieve from the constant barrage of creditors contacting you.

Bankruptcy will drop your credit score. This limits your options to take on new debts and loans, but you can raise it again over time. Failing to take action may be even worse for your credit score.

If you have questions about the bankruptcy process and want to know how to prepare, you can consider legal guidance to learn more.