If you have accumulated a considerable amount of debt and have no way to pay it back, you may be considering insolvency. While this could potentially relieve you of your financial problems, it is important to know precisely what it is you are getting into. Therefore, you should have at least a basic awareness of what you will need for the proper ruling, what it entails, and how it may effect you. Keep reading to figure out just what filing for insolvency will mean for you:
What It Means
There are different types of insolvency, depending on the debt you have incurred and what your financial standing is like. Chapter 7 is considered by individuals who have no means of paying their creditors back. In this category, you will be exempt from all of your debt. However, most of your possessions and belongings will be sold to ensure that your creditors receive some compensation. Chapter 13 is for those that can pay back their debts but are not able to do so in the immediate future. Here, there is a payment plan worked out where the creditors are paid over a period of time. With this type of insolvency, you do not have to forego any of your personal items.
What You Need
Now, insolvency, technically is something that you can manage by yourself. However, this course of action is not recommended as this is not a simple procedure. There is an incredible amount of paperwork, documents that need to filed, and various other techniques to adhere. If these are not done properly and within a particular amount of time, you will not be provided with your claim. This is why it is best to hire a personal bankruptcy attorney in Scottsdale. They are aware of what the necessary steps are and precisely what needs to be done. Therefore, you will be able to ensure that everything goes as smoothly as possible. If all of the requirements are handled according to plan, you should be able to deal with everything quicker as well.
The Time Involved
Chapter 7 insolvency is often handled the quickest. Typically, it can last up to four months for all of the details to be sorted out. With Chapter 13 it is longer as you have to pay back the debts. This is usually between three to five months, depending on the repayment plan that has been constructed for you.
How It Affects You
For individuals who really cannot get up from underneath a mountain of debt, insolvency is the best option. It gives them a bright future and a way to start from scratch again. Nonetheless, it is not without consequences. The provision of a Chapter 7 insolvency will be added to your credit report and will not be removed for a duration of ten years. As you will have paid back most of your debt with Chapter 13 bankruptcy, this notation will only be present on your credit report for seven years. This could impact your ability to get credit in the future as well as have an effect on other areas of your life as well.
Now you can better understand just what filing for insolvency can entail. This way, you will be able to decide on the best path for you.