You shouldn’t. A skilled bankruptcy attorney can review your options so you can retain all property you wish to retain. Sometimes folks lose property because they did not get good legal advice or representation or, worse yet, filed their case on their own with no legal assistance or the help of a petition preparer. This is why it is critical that you seek a consultation with an experienced, skilled bankruptcy attorney.
It is a common misunderstanding that Bankruptcy ruins one’s credit forever or a very long time. The truth is a successful Bankruptcy cleans up your credit and you can utilize credit much sooner than expected. You see, elimination of debt in bankruptcy makes one a prime target for solicitations from the credit card companies and lenders. You will want to be smart about the use of credit, but bankruptcy will not impair your ability to buy a car or home once you have the funds to do so and meet all other eligibility requirements.
If you are a renter when you file for bankruptcy, it is highly unlikely your landlord will care unless it affects your ability to pay rent. If you look for a place to rent after filing bankruptcy, a prospective landlord may be concerned to see a bankruptcy filing on your credit report but the smart landlords/property managers know that your bankruptcy frees up your money to pay living expenses. The main factor in renting is to demonstrate you can pay the rent. None of my renter clients were unable to find a good rental situation.
You could, but your chances of successfully completing a case that gives you the optimum asset protection and very best fresh start are not good. Bankruptcy is a very complicated process. It does involve the filling out of a lot of forms which you might think you can do but the understanding of how to best prepare those forms so that you can obtain the best relief possible can only be obtained with the help of competent bankruptcy counsel. The success rate of folks who file on their own is very low. If you file a botched case, you may wind up losing an asset you intended to keep or paying more to your creditors. Bankruptcy representation is relatively inexpensive when you consider how much you have to lose.
The most common form of bankruptcy relief for individuals, married couples and small businesses is a Chapter 7 or Chapter 13. A skilled bankruptcy attorney can help you assess which type will provide you with the best relief and chance for a fresh start. In general, if you have insignificant assets and income below the median income level may qualify for Chapter 7 relief where a trustee is assigned to take temporary legal control of your property. It is the trustee’s job to determine if any of your assets or income can be utilized to pay your creditors. If so, the trustee has full legal authority to sell those assets and disburse funds to your creditors. This works for folks who have a lot of unsecured debt and old tax debt who just want to get out from under this debt and have a fresh start. If they don’t have a car or house or other substantial property, then they have little to lose and a lot to gain by eliminating all unsecured debt like credit card debt or loans in a short period of time, usually three to four months.
A Chapter 13 is an option for those who have income above the median and/or have property they wish to retain. In a Chapter 13, the debtor(s) retain control of their property. If there is non-exempt equity in that property, the debtor(s) can propose monthly payments to distribute that non-exempt equity to unsecured creditors on a pro-rata basis over time. A skilled bankruptcy attorney can assist in identifying appropriate exemptions and protect as much of the equity you may have in your property . There is also a calculation that is done called the “means test” which determines how much of your income may be available for unsecured creditors. An experienced bankruptcy attorney can assess and apply all applicable deductions to determine the least amount a debtor would have to pay to unsecured creditors. In many cases, a good attorney can help eliminate or reduce all unsecured debt and assist in developing a payment plan to pay your car and/or home and any recent tax debt you owe over a 60 month period. This is especially useful in cases where you want to keep your home but have fallen behind in mortgage payments or need to pay off tax debt with a payment plan that meets your budget.