Filing for bankruptcy is something that many people find themselves doing at some point; there are a variety of financial hurdles that can make bankruptcy the best option, including medical bills, a failing business, or simply taking on too much debt. However, it's important to consider bankruptcy carefully before taking this route. Bankruptcy has a major impact on finances for years, and it's also a process that can take more time than many people expect. Here are three things to consider before filing for bankruptcy.
How Long It Takes
The first thing that should be considered when it comes to bankruptcy is that it can take a while to go through. On average, Chapter 7 bankruptcy takes between four and six months from start to finish; Chapter 11 and Chapter 13 bankruptcies can take even longer. A Chapter 13 bankruptcy can take three to five years, while a Chapter 11 bankruptcy can take two years or even longer. If you are attempting to discharge or restructure debts quickly, there may be better options than filing for bankruptcy.
Types Of Bankruptcy
It's also important to take a close look at the different types of bankruptcy before filing. When it comes to individuals, Chapter 7 bankruptcy is the most common choice. With this type of bankruptcy, assets are liquidized to pay off debts and the remaining debt is discharged. Chapter 11 is most commonly filed by businesses. This type of bankruptcy allows the debtor to keep control of their assets and work out a plan to pay of their debts to their creditors. Chapter 13 is similar to Chapter 11 but is used by individuals. Chapter 12 bankruptcy is a special type of bankruptcy that is specifically for farmers.
Most people or businesses file for bankruptcy in order to get rid of their debts. Oftentimes they don't have a lot of extra cash in their possession. However, the cost of filing for bankruptcy is something to consider. Filing for bankruptcy can actually be pricey. It costs on average between $1,000 and $3,000 to file for Chapter 7 bankruptcy, and between $1,200 and $3,500 for Chapter 13 bankruptcy. A Chapter 11 bankruptcy, since it involves a business instead of an individual, can be very pricey. This type of bankruptcy can cost as little as $15,000 to upwards of $100,000 depending on the size of the business and the lawyer fees.
Bankruptcy is something that many try to avoid; however, filing for bankruptcy may be the best choice for future financial health. Before filing for bankruptcy, it's important to know that the process can take as little time as a few months to as much time as a few years. Bankruptcy can also be expensive. It's also important to decide which type of bankruptcy will work best for your situation. For more information, contact professionals like Molleur Law Office.