Every year, millions of Americans file for bankruptcy, many of them in Idaho. Understanding the bankruptcy process and expectations is essential if you are considering filing for bankruptcy.
In this blog post, we’ll discuss the steps you need to take to file for bankruptcy in Idaho and the different types available. Feeling overwhelmed by your debt and thinking bankruptcy might be the right solution for you? Read on!
What Is Bankruptcy and How Does it Work?
In bankruptcy, individuals are provided with debt relief when they are unable to pay their debts back. A bankruptcy filing results in an automatic stay, which prevents creditors from pursuing collection actions.
Reasons Why You May Need to File for Bankruptcy
There are many reasons why you may consider declaring bankruptcy. You may need bankruptcy if you constantly struggle to pay for necessities, fall behind on your bills, or use your credit cards to pay for necessities.
Other reasons to file for bankruptcy include:
- You are being harassed by creditors
- Your home is in foreclosure
- Your debt payments are difficult to make
A bankruptcy attorney can discuss your options if you experience any of these situations.
Alternatives to Bankruptcy
Filing for bankruptcy is not something to be taken lightly. Knowing your options is essential before making any major decision.
Debt settlement and credit counseling are good alternatives to bankruptcy. Nevertheless, you should always consult with a financial advisor before making a decision. For faster repayment and to save money on interest, you can consolidate your debt into a single monthly payment.
Last but not least, creditor negotiations are always worth attempting. A successful agreement can avoid bankruptcy, even if this is a complex process.
The Different Types of Bankruptcy
There are two types of bankruptcy that individuals can file in Idaho: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a type of bankruptcy that allows certain types of debts to be discharged or eliminated. Since creditors don’t get paid, the process is cheap and can be completed within a few months. This type of bankruptcy is suitable for people who own only the essentials to live and work, as those with more assets can run the risk of losing them.
Moreover, there is no payment plan option for catching up on late mortgage or car payments, so you could lose them if you’re behind when filing.
On the other hand, Chapter 13 filers can repay their debts over a period of three to five years. There are, however, benefits to Chapter 13 that are not available to Chapter 7. For example, you will be able to keep all your property, as well as avoid foreclosure and repossession. Using this chapter, you can force a creditor to accept a payment plan if you cannot discharge a debt in bankruptcy.
How to File for Bankruptcy in Idaho
If you are considering filing for bankruptcy in Idaho, it’s important to know how the process works. The steps have been detailed below.
- Gather Your Idaho Bankruptcy Documents: You will need copies of your tax returns from the previous two years and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. When your income does not exceed 150% of the poverty guidelines in Idaho, you can request a filing fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Idaho Bankruptcy Court: You can file bankruptcy in Idaho without a lawyer either by mailing everything to the court or by personally handing in your paperwork at the court. Mail can be delayed, so delivering the forms to the court is better. In this way, you’ll know immediately if there are any issues with your paperwork. It may even be possible for you to fix whatever needs to be fixed on the spot.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Attend a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
What Happens After You File for Bankruptcy?
In bankruptcy, most of your unsecured debts will be forgiven, so you will no longer have to pay them back. Student loans, child support, and alimony are not forgivable through bankruptcy, however. Depending on the type of bankruptcy you file, some belongings may also be forfeited.
Does Bankruptcy Impact Your Credit?
There will be a mark on your credit report for seven to ten years after you file bankruptcy. You may have difficulty obtaining a loan or credit line due to this. Despite what many people believe, bankruptcy does not mean the end of your financial life. You can rebuild your credit by making on-time payments and maintaining a good payment history.
Rebuilding Your Credit Post Bankruptcy
You can also rebuild your credit after bankruptcy by doing the following:
- Getting a secured credit card.
- Getting an authorized credit card user account.
- Taking out a small loan.
- Maintaining a timely payment schedule.
- Regularly check your credit report for errors.
Sell Your House and Avoid Bankruptcy in Idaho
No one wants to be in a situation where they must file for bankruptcy, but if this is the case, we can help! Selling your house for cash can help you get back on your feet and avoid a hard hit on your credit.
At Favor Home Solutions, we buy houses as-is to make the process as easy as possible for you. Our team will walk you through the entire process, working under your preferred timeline so that you can feel supported and comfortable. We’ll provide you with a fair cash offer for your home so you can avoid bankruptcy and move on to the next chapter of your life ASAP. Contact us today!