Many people struggle with their finances each day, and many more will be subject to some tough decisions in the coming months. While no one sets out to become financially insolvent, it happens to the best of us. Job loss, divorce and medical illness can force even the most financially savvy person into the need for bankruptcy. Luckily, filing can give anyone a fresh start.
Is It Right For Me?
Although there isn't a hard and fast rule for knowing whether bankruptcy is the right choice there are a few signs it could help. Are you more than 3 months behind on multiple debt accounts? Have you received collection letters or notifications of wage garnishment? Is your home at risk of foreclosure? Do you owe more in debt payments than you have in disposable income each month? Do you borrow from one credit source to pay another debt account? If you answered "yes" to any of these questions, it may be time to seek counsel from a bankruptcy attorney.
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Which Type Is Best?
The most commonly sought after form of bankruptcy is Chapter 7. Offering debt resolution through little to no out of pocket costs to the debtor, Chapter 7 is also a fast process that can have you debt free in about 6 months. However, Chapter 7 bankruptcy comes with some additional considerations.
First, not everyone qualifies for Chapter 7. In order to be eligible, you have to pass a means test; which evaluates your income against the median income level of your state. If your income is less than or equal to this amount, you may be eligible to file. If your income is greater than this amount you will not be eligible to file, but may file for Chapter 13 instead. Also, Chapter 7 cannot resolve all debts without risking possession of certain assets. Your house and car may be at risk of liquidation if you do not continue to make payments. Last, Chapter 7 can have a more significant impact on your ability to secure future credit. While filing for bankruptcy doesn't damage you credit, lenders are more hesitant to lend to someone that did not fulfill their debt obligations.
Many people assume Chapter 13 is a substandard type of bankruptcy, but the opposite is true in most cases. Filing for Chapter 13 may take longer to complete, but the implications for future credit and loans can be far better.
Unlike Chapter 7, just about anyone can qualify for Chapter 13 bankruptcy. Because there is no income restriction, Chapter 13 can be a better option for those with higher incomes. Also, since payments will be made to creditors through a series of affordable payments over the course of three to five years, debts will be considered "repaid" rather than "satisfied". This minimizes the implications of future credit and loans.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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