Times can get tough and although you may not want it to happen, debts could be piling up and you may find it difficult to pay for them. Filing for bankruptcy is one of the solutions that people who are experiencing financial hardship may think of this to resolve their credit problems. However, this should be taken only as the last resort to take care of financial problems.
While filing for this may get rid of some or all of your debts, the process doesn’t come without fees and it would also hurt your credit record for a long time. There are two common types of bankruptcy in Hawaii that you can file. They are Chapter 7 or straight bankruptcy and Chapter 13 or Debt Adjustment. Debt adjustment bankruptcy will stay in your credit record for 7 years, while straight bankruptcy would stay for 10 years. As you may already know, this could affect your future loans, as well as your job application as many lenders and employers check for credit history.
Alternative to Filing for Bankruptcy
Filing for bankruptcy is not recommended until you tried other alternatives. It should be your last resort because of the negative effects that it could bring to you in the future. One of the things that you can do to resolve your debt issues is to talk with your creditors. Let them know your current situation and come with a plan on how you can repay them. More often than not, they would be willing to compromise and develop a payment plan with you.
You may also enter a credit counseling plan in which repayment plan would also be created. The good thing about this is that creditors would lower your interest rate, as well as allow you to give lower monthly payments, which you will deposit each month. Another option is debt consolidation where you will get another loan in order to pay off your current loans. This way, you can just focus on paying the consolidated loan, which can help if you’re having difficulties managing how to schedule payments on various loans.
How to File for Bankruptcy
In case the given alternatives don’t work and you decide to file for bankruptcy, you would still be asked to undergo 6 months of credit counseling. Various forms called “schedules” must be completed when filing for bankruptcy in Hawaii, according to Cain and Herren. These documents will get information regarding your assets and properties, debts, expenses, major financial transactions and income sources. Your expenses and income sources would be analyzed to determine if you qualify for the Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy would eliminate your loans, although properties that do not fall under the Hawaii Bankruptcy Exemptions, would be sold and the amount would be distributed to pay your creditors. Chapter 13 bankruptcy on the other hand would let you keep your properties as long as you can repay your debts within a period of 3 to 5 years.
You may get the help of a professional bankruptcy lawyer to help you with the process or do it yourself. If you hire one, the attorney can act on your behalf, which is a huge help, especially if you’re not familiar with the process. However, you must pay your lawyer, depending on the amount you agreed upon. It would also cost you $189 to file for a Chapter 13 bankruptcy and $274 to file for a Chapter 7 bankruptcy. Upon filing for bankruptcy credit collectors would be asked to stop calling or collecting from you until the court settled your case. However, bankruptcy does not cover debts after filing for bankruptcy, child support and alimony.
