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Important Aspects to Know 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 decision on whether you are eligible for bankruptcy is made after both the judge and the trustee have reviewed information to declare you bankrupt 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. You also ought to know that chapter 12 is in most cases occupation-based occupation-based. You will also get to know that most of the debts in chapter 7 are forgiven and it also entails the risk of having to sell some of your assets to clear part of the debts.

Bankruptcy filing is both a long and expensive task. One of the things that you must always be ready for is to meet the credit counselor for bankruptcy and debt and also assembling all the important information for the process. You should also be at the frontline to show the court that you have made the best effort you could in an attempt to fix the situation.

You also need to know that normally there are plans to have a look at your financial situation as arranged by the court. The whole process of having a look at your financial statements is normally done by the court trustee, the lawyer, and the creditor. It is, however, important to note that this process is not a one-day event and could take as long as several months before any approvals are made. The tips above should give you a clue about what to expect when filing for bankruptcy.