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The mental advantages of Chapter 13 bankruptcy
Filing for Chapter 13 bankruptcy carries various benefits, such as granting freedom from debt and opening up new opportunities. However, bankruptcy is advantageous in other ways as well. For example, many people benefit from a mental point of view. Successfully working through bankruptcy often brings stress relief and helps people struggling with depression as a result of their finances.
If you are considering bankruptcy, it is important to think about all of the ways in which your life would turn around by eliminating debt.
Depression, anxiety and bankruptcy
Those who work through a Chapter 13 bankruptcy properly often feel less stressed out once the process is complete. For those with depression, or feelings of hopelessness, this is also true in many instances and a lot of people feel more positive and optimistic after they get rid of debt. Sometimes, people who have emotional challenges feel even more stressed out prior to filing for bankruptcy because they are unsure of how to approach the situation. However, many feel very relieved once their bankruptcy is over.
Will I lose my home if I file bankruptcy?
If you are in the process of considering bankruptcy, it is likely that you have multiple financial concerns. Many people are aware that filing bankruptcy can lead to asset loss. Thus, one of the most common concerns bankruptcy filers have is if they will be able to keep their homes after they file bankruptcy.
In many cases, you will be able to keep your home after bankruptcy. According to FindLaw, whether or not you can keep your home depends on the type of bankruptcy you file and your particular financial situation.
How does the type of bankruptcy matter?
If you qualify and file for a Chapter 13 bankruptcy, you will be able to keep your home. In fact, one of the biggest advantages to a Chapter 13 bankruptcy is that you will not lose any assets during the process.
If you file a Chapter 7 bankruptcy, there is a chance that you will lose your home. However, this depends on other financial factors.
How can I avoid losing my home with Chapter 7?
Much depends on the equity you have in your home. Equity is the value of your house after subtracting any mortgages or home equity loans you have. If your Equity is negative, the courts will exempt your home from the liquidation process.
Can bankruptcy discharge medical debt?
Medical emergencies are extremely hard to prepare for. When an injury or illness can appear instantly, victims have very little time to build a savings to pay for the debt. When tens of thousands of dollars of medical debt become a significant obstacle for someone, what can they do to recover?
Health care is extremely expensive. Every year, the United States spends 3.5 trillion dollars on medical expenses. Staying in a hospital can cost more than $5000 per day. Medical debt can keep a family from getting ahead on other debt and deny the chance to improve their lives, but bankruptcy may be the answer to beating it.
What bankruptcy can do
Personal bankruptcy comes in two primary forms: Chapter 7 and Chapter 13 bankruptcy. While both options discharge unsecured debt like medical debt or credit card debt, each of these options impacts medical debt differently. Chapter 13 bankruptcy allows an applicant to restructure the debt payments into a payment plan lasting between three and five years. After this period, the court will discharge any remaining debt.
Qualifying for a mortgage after a Chapter 7 bankruptcy
Seeking Chapter 7 bankruptcy protection can help you get out from under your mounting debts and finally re-establish yourself on a firm financial footing. Yet at the same time, such an action does have an impact on your credit rating, which may make it difficult for you to secure financing for large purchases (such as a mortgage) in the days and months immediately following your bankruptcy.
Many come to us here at The Law Office of Donald L. Bell asking how long after filing for a Chapter 7 bankruptcy might they be able to qualify for a mortgage. If you share the same question, you should know that there likely is not an easy answer to this question.
How long to wait to apply for a mortgage
Officially, there is no mandatory waiting period after filing for bankruptcy for you to apply (and qualify) for a mortgage. Simply based on approval rates, however, a general pattern emerges for the different home loan programs available to you. Per Lending Tree, these are:
Explore these options before considering bankruptcy
Many people with financial problems may consider filing for bankruptcy. This legal process provides individuals relief from their debt and a second chance at financial success. Though bankruptcy might be the only choice for many people in Maryland, other options might provide better solutions.
Before filing for bankruptcy, many states require that people try credit counseling and financial evaluation. Credit counselors are very resourceful and may find a solution that benefits creditors and debtors alike.
Credit counselors examine finances for opportunity
Credit counselors can help those with financial problems find solutions. By reviewing one's entire financial situation, including income, debt, savings, spending habits, and more, a counselor can professionally assess one's situation and recommend a course of action. Counselors will try many tactics before recommending filing for bankruptcy.
Financial counselors may recommend the following:
Is filing Chapter 7 bankruptcy the right choice for you?
Many Americans find themselves in extreme debt with no recourse to pay. The United States Courts report that there were over 750,000 non-business bankruptcy filings in 2019, with over 773,000 cases in total.
If you find yourself in serious debt, you may have considered Chapter 7 bankruptcy as a way to discharge the amount. However, other options may exist and understanding which might best suit you can help you gain better control of your finances.
The ability to file
There are certain conditions for filing Chapter 7 bankruptcy. For example, your total debt must exceed your income. If you are unemployed and have no current income, it is likely you qualify to file. You may have to provide proof of hardship and an inability to pay before you are allowed to file.
Chapter 7 vs. chapter 13
Choosing a bankruptcy type that best suits your situation can have a serious impact on your financial future. Chapter 7 erases or discharges your debt completely, while chapter 13 reorganizes what you owe and provides you with a repayment plan you can manage according to your income. With Chapter 13, you may have to surrender property to help repay your debts, such as vehicles and real estate.
What kind of debt can bankruptcy discharge?
When someone is experiencing considerable financial debt, bankruptcy may be the best option for them to recover from debt. While bankruptcy may be the right choice for many, it does not eliminate or manage all debt. There are two forms of debt: secured and unsecured.
Bankruptcy only eliminates unsecured debt, meaning someone who files for bankruptcy will not be ultimately debt free after their discharge of debt. Even though bankruptcy does not discharge all debt, it is still a viable option for many people. In 2019, more than 750,000 people filed for bankruptcy. SO what kind of debt can bankruptcy eliminate?
Secured debt
Unsecured debt does not have any collateral, or security, attached to it. Without bankruptcy, if a borrower could not pay the debt, the lender would need to file a lawsuit to collect their losses. Popular examples of unsecured debt are:
Auto accidents and unmanageable debt
After a motor vehicle wreck, victims often face many challenges. Serious injuries, emotional trauma and losing the ability to work are often very hard. Moreover, all of these difficulties often give rise to other problems in one's life, especially from a financial point of view. Many people take on high levels of debt in the wake of a car crash, and it is imperative for people to understand their options when it comes to addressing this debt.
For some, payment plans and paying close attention to one's finances help eliminate debt. However, filing for bankruptcy is necessary, in some instances.
Medical costs, bills, lost wages and other problems
There are multiple reasons why the impact of auto accidents is often very devastating in terms of finances. Many victims struggle with medical expenses due to a crash, and some take on high levels of debt that they cannot afford to repay. Others fall behind on their bills, especially if they have to take time off work or cannot work any longer because of an accident. Furthermore, many people use their credit cards to get by, resulting in excessive interest charges that destroy their financial well-being further. When someone takes on debt that they cannot deal with, it is imperative to address the situation swiftly.
Does Chapter 7 stop debt collector calls?
Filing for bankruptcy is not an easy choice to make. Thousands of Americans struggle with overwhelming credit card debt, medical expenses and mortgages. However, for some in Maryland and in many other states across the U.S., claiming bankruptcy is a way to start fresh with a clean financial slate.
If you have been involved with late credit card payments, mortgage payments or had your medical expenses sent to a collections agency, you know first-hand how difficult it can be to keep up with creditor calls. It may seem as if those collectors will never stop calling. Yet, there are ways to stop the harassment.
What is an automatic stay?
Once you file for Chapter 7 bankruptcy, an automatic stay is put in place, according to the United States Courts. The stay bans any creditors or collection agencies from contacting you regarding your debt. These agencies cannot call you or correspond with you via email or mail. Furthermore, they are unable to continue pursuing lawsuits or garnishing wages.
Repairing credit after bankruptcy
For many individuals who find themselves in overwhelming debt due to unexpected medical bills or unpaid tax debts, bankruptcy offers a fresh start and a way to begin recovering financial stability. While filing for bankruptcy may lower an individual's credit score temporarily, there are several ways to increase the score after going through bankruptcy.
Bankruptcy and credit reports
Both chapter 7 and chapter 13 bankruptcy may offer benefits to individuals who are having trouble paying their bills. People who have a steady income may qualify for chapter 13, which may stop foreclosure proceedings and allow the filer to pay off secured debts within three years.
According to the U.S. Courts, once an individual completes all payments under the chapter 13 plan, he or she receives a discharge. This legal ruling releases the individual for any debts covered by the bankruptcy plan. Within a few years after the discharge, the chapter 13 information may drop off the individual's credit report, allowing him or her to improve the score.
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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
