Bankruptcy application forms wipe out debts quickly and efficiently, but not without repercussions. People who are planning to use credit cards over the next few years, take out an auto loan, buy a house or get a student loan will have difficulty gaining any sort of credit in the immediate five to seven years. Bankruptcy is one of the worst things that can appear on your credit report file for up to 10 years. Before you take that big step, be sure you’re clear on bankruptcy alternatives and bankruptcy facts.

First, let’s take a look at the most basic bankruptcy facts and what filing bankruptcy forms can and can’t do for you. Consumer law allows you the ability to legally eliminate most — if not all — of your debts through a bankruptcy discharge. This includes all credit cards, medical/hospital bills and some personal loans. If your car has been repossessed or your home in is foreclosure proceedings, court bankruptcy forms will put a stop to these actions. You’ll be able to stop wage garnishment, utility shut-offs and debt collector harassment as well. However, bankruptcy can’t completely absolve a car loan, a student loan or a mortgage payment. It cannot discharge alimony payments, child support payments, criminal fines, IRS tax debt or court restitution orders. Filing for bankruptcy cannot save you from debts you incur after the initial filing and cannot protect your spouse or cosigner.

Another one of the bankruptcy facts you should know is that there are multiple types of filings and you can only choose one for your situation. You could not, for instance, make a petition for a Chapter 7 bankruptcy and, upon rejection, then apply for Chapter 13 instead. You may come across online forms for Chapter 7 bankruptcy, which is known as “straight” or “liquidation” bankruptcy. In this case, you will give up property that exceeds exemption limits, which will be sold by a trustee to pay off creditors. In return, all your debts will be forgiven. Chapter 13 bankruptcy is called a “debt adjustment” and requires that you still pay back your debts each month, but restructures it in an affordable and reasonable way. In this case, you can still keep your personal property. Family farmers may be eligible for Chapter 12 bankruptcy and small businesses or individuals with enormous debts can file for Chapter 11.

Here are several more bankruptcy facts to consider. The court costs and legal professional fees can cost upwards of $1,000 in some cases and cannot be discharged. However, you can talk to your lawyer about ways to reduce your fees or wrap the costs up into your Chapter 13 payments. Be aware that property can be lost in a Chapter 7 filing if your assets exceed the state/federal exemptions. However, you can sometimes recover your favorite possessions by paying the difference from the exemption. Bankruptcy will appear on your credit report for 10 years, which will impact your ability to rent an apartment, buy a home, buy a car, take out a student loan, gain access to credit cards or sometimes even get a job. However, you may begin rebuilding your credit by continuing to make regular payments on your car or home and taking out a loan from yourself, which you pay off each month.

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