Getting court-ordered debt relief is the worst thing a person can do for their credit. It will only make things worse. Seeking a debt modification of sorts is the better route. These are all things individuals touting certain debt relief strategies would have people believe.
The simple truth is, for those who are really far in debt, bankruptcy may be the best option, but there are a few things about it that Kentucky residents should know before taking the plunge.
There Are Two Types of Bankruptcies for Consumers
For those with little to no income, Chapter 7 bankruptcy — if court-approved — will allow for the discharging of certain debts. For those individuals with income deemed high enough to pay debts just stretched too far, a Chapter 13 — if approved in court — will result in one achieving an affordable payment schedule to pay off or pay most of his or her debts.
There Are Bankruptcy Fees & Attorney Fees
Filing for bankruptcy does cost money. There are court costs and filing fees, though they are typically fairly minor. You will also need to pay bankruptcy attorney fees to have a bankruptcy lawyer help you navigate the paperwork and complicated bankruptcy laws.
Bankruptcy Will Affect Your Credit
Bankruptcy approval can affect one’s credit rating, so your credit score will take a hit initially. But it is possible to raise one’s score over time by keeping good spending habits, budgeting, and making your credit card payments on time. A bankruptcy will also eventually fall off your credit report after a certain amount of time.
If you're deep in debt, chances are your credit is already low. Filing for bankruptcy can help eliminate your debt so you can start rebuilding your credit.
Bankruptcy Filings Are Public Record
Bankruptcy case documents are public record and can be accessed by the general public, unless a judge seals the records. However, it is unlikely that anyone will know that you filed for bankruptcy unless you tell them.
Bankruptcy Won't Eliminate All Debt
While bankruptcy can effectively get rid of debt, there are certain debts that you cannot eliminate. Debts such as child support, certain taxes, student loans, and secured debts (a mortgage or car loan) are debt obligations that may still stay with you.
Interested in Bankruptcy? Call Us.
With the help of legal counsel, Kentucky residents will be able to make informed decisions regarding whether filing bankruptcy is really right for them. For more information about bankruptcy, contact our team for a consultation.
Source: refinery29.com, “What Happens When You File For Bankruptcy?“, Judith Ohikuare, March 9, 2018