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A Simple Guide About What Happens When You File for Bankruptcy

Although in most cases getting some loan is an easy task once you meet all the requirements, paying back the debt may be a big problem to some. The most commonly asked question by most debtors who have a hard time settling the debts is what next for them. Most people and even businesses may never like the discussion about bankruptcy but now that it has already hit some people, you must know some key things about this big threat. It is important to note that bankruptcy is a legal process and it involves the debtor and the lender in case of the debtor gas no capacity to pay back all the loans.

To begin with, you need to know how it all happens in court. The decision about bankruptcy is made in court and this is through a judge and an independent contractor who is hired for this service. The two parties will take their time and have a review and finally make a decision whether you are eligible for bankruptcy or not.

Another important point for you to note is the fact that we have very many types of bankruptcy. Whereas chapter 7 is the most common type of bankruptcy, we also have others like chapter 11, chapter 12 and chapter 13. It is also important that you get to know that some of these types of bankruptcy are occupation-based such as chapter 12. Although chapter 7 bankruptcy may forgive most of the debts, you may have to sell some of the important bassets that you own to pay the debt.

Bankruptcy filing is both a long and expensive task. Remember you will have to meet the credit counselor for bankruptcy and debt as well as putting all the relevant information in place for the process. Always try to show the court that you have tried all that you could to settle the situation.

Your financial situation is the next greatest tool for the court before a decision is made. The whole process of having a look at your financial statements is normally done by the court trustee, the lawyer, and the creditor. You need to note that this process lasts for a long time and can take up to 6 months The tips above should give you a clue about what to expect when filing for bankruptcy.

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