by Susan Paige
The current economy and the number of jobless claims have stricken our nation. Many people are struggling to pay their bills every month and are often left in the difficult position of choosing between keeping their bills current or feeding their families. If you’re in this position, you may feel the only way out is through bankruptcy.
What Are Your Rights When Filing Bankruptcy?
Before you file bankruptcy, make sure to do your research so you learn your rights. A reputable bankruptcy attorney can let you know what to expect and how your financial future will be affected should you file bankruptcy.
You Can Keep Your Assets
One of the most important things to know is that you can keep your assets, depending on what type of bankruptcy you file.
Automobile
If you owe money on your automobile, there are many ways to stop repossession of that vehicle.
As part of the bankruptcy, you should notify the company holding your loan and make arrangements so you can continue paying for and keeping your vehicle. One way you can do this is by extending your loan payment for 60 months, thereby lowering your monthly payment so you can remain current.
Another option some people seek is to sell their vehicle on their own. This avoids repossession and let’s you pay off the loan. If your vehicle is worth more than you owe, you’ll also get some money that you can use to pay for a cheaper vehicle that you can afford. You may want to take this action before you apply for bankruptcy because your credit score will likely be very low after filing bankruptcy.
House
Likewise, you can keep your house by restructuring your payments so you are better able to afford them. However, whether you file Chapter 7 or Chapter 13 of bankruptcy, the process is easier if you’re current with your home loan payments when you enter bankruptcy. If you’re not, depending on your state and what chapter you file, you may need to make arrangements to slowly pay back, over a number of years, the amount you’re behind.
Student Loans
Unfortunately, many people face bankruptcy because they owe tens of thousands or even hundreds of thousands in student loan debt. This type of debt is not discharged in bankruptcy. Instead, you’ll likely need to restructure your payments.
The likely best option available for restructuring your payments is the Income Based Repayment Option. This option is based on how much money you bring in monthly. If you’ve lost your job, you won’t have to pay anything until you have a job again. This is also a good option for borrowers who currently have low-paying jobs.
If you have a government job, you can also look into loan forgiveness, which is generally available after 25 years of making payments.
Final Thoughts
No one likes to be in a position where they are thinking of filing bankruptcy. However, knowing the facts can help you make the best decision. Also, know that with the current economic situation, you’re not alone. Many more people than usual are considering bankruptcy this year.
So, what do you think ?