People don’t usually plan for failure. They tend to think in terms of success, of best-case scenarios, and of positive outcomes. Occasionally, the road to success is fraught with enough financial perils that when debts begin mounting and serious financial difficulties arise, the only way to get back on track is to file bankruptcy.
Bankruptcy doesn’t have to mean permanent financial ruin. It can actually lead to a fresh start that makes it possible to realign with your original goals. Knowing how to navigate through a bankruptcy can make the process much easier. It can also help you avoid pitfalls along the way.
Plan ahead for filing bankruptcy
First of all, it is important to know that filing bankruptcy does cost money to file. It is important to hire a Chapter 7 Bankruptcy Attorney to ensure that all paperwork has been filed correctly, all exemptions have been claimed, and all deadlines are met. Expect to spend anywhere from $2,500 to $10,000 to file Chapter 7 Bankruptcy, which means total liquidation of all nonexempt assets.
Be aware of exemptions
Some personal assets that are not business related can be counted as bankruptcy exemptions. These include your personal residence, a large portion of your wages and salaries, and personal property. Household items, jewelry, personal bank accounts, tools used in your trade, financial aid payments, personal injury payments, and insurance may also be exempt.
Know how to keep your personal residence
One of the most important exemptions to be aware of is the home that you live in. Most states have homesteading exemptions. This means that even if you file for liquidation bankruptcy, you are usually allowed to keep your place of residence. However, if the home has been used as collateral, the home is likely to become property of the lender in the case of default.
Filing Chapter 7 Bankruptcy usually involves the fastest process compared to other types of bankruptcies. It can often be resolved in as few as 60-90 days. Remember to get help from an attorney, and know that filing for bankruptcy does not mean failure.
There are many very successful people who have gone bankrupt at some point in their lives. Even financial gurus like Dave Ramsey have had such blips on their credit history. Filing bankruptcy is nothing to be ashamed of. Sometimes, it’s the only way to get back on the path to success.