How to Stay on Top of Bills During Bankruptcy


You don't file bankruptcy because your rich, and you may be worried about this lack of money during the process. You likely stand to save tens of thousands of dollars with a Chapter 7 bankruptcy, or protect assets worth thousands during a Chapter 13 filing. But how can you keep paying on essential bills?

You file quickly. With a Chapter 7 bankruptcy, you will be discharged in a matter of months. You can only file Chapter 13 if you have the means to fund the payment plan, so you likely have some money. But remember that, when filing Chapter 7, this process is much faster. You can file and eliminate the debts in 2-3 months in most situations. This allows you to save money and then use what you have to pay off debts. A Chapter 13 bankruptcy takes longer, typically 3-5 years, but you get more time to pay on debts and more protection for properties and assets.

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You can keep certain assets, but you might not want to keep everything. If you truly want to protect your major assets - such as your home and car - you have to consider how you might fund a Chapter 13 repayment plan.

You must have an income in Chapter 13 bankruptcy. Many consider Chapter 7 more effective because you stand to save money. If you cannot keep up on your bills, Chapter 7 is smart. But, if you keep assets by filing Chapter 13, that is like keeping money in the bank. A home or car will always have some value.

You need to cut down on bills and expenses when filing bankruptcy. It may be tough to stop spending like you're used to, but set some goals for ripping up credit cards, paying off loans, and stopping spending on things you simply don't need. This may sound easy, but spending can be almost an addiction. You may even want some financial counseling to prepare for the next years of your life. And remember: it won't always be this way, as your financial situation will improve.

You might sell certain assets to keep up on bills. The more you have, oddly enough, the more financial protection you have. Technically, a Chapter 7 bankruptcy will discharge your debts and liquidate your assets. You do have options to pay on assets and keep them. And some assets will be exempt. This gives you some extra capital should you get a big bill in the mail. While downsizing from a home to an apartment may be an extreme, you might save the thousands you need to pay off major bills.

Filing bankruptcy has many advantages, most notably how you get a fresh start, a second chance financially. Have a goal of being financially solvent again - set a time you want to be on top of bills. If you are curious about how the bankruptcy process works, what assets you stand to keep and what debts you can discharge, consult with an experienced bankruptcy attorney.


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