Struggling to make ends meet is a common experience for Americans. Some of us are even faced with hard choices such as paying bills on time or providing for the needs of our families. Knowing that you won’t ever be able to pay off your debt can be extremely stressful, and it can be difficult to decide how to move forward.
Fortunately, bankruptcy may be the solution to your debt problems; in fact, over one million people file bankruptcy each year. Before taking any action, it’s best to do some research and familiarize yourself with the bankruptcy process and legal terminology.
Insolvency VS Bankruptcy
People sometimes say they are bankrupt when money is tight, but they are actually insolvent. This means you don’t have the assets available to pay your debts on time each month. Your assets include your monthly income, but also any property that could be sold or liquidated to pay your bills. Investments would fall in this category.
It’s possible to go in and out of the state of insolvency from time to time. However, this doesn’t make bankruptcy your best next step. You may be able to increase your income, work with creditors on your debt payments, or revise your budget to make payments manageable. It’s always best to avoid bankruptcy if at all possible. That being said, sometimes filing is the best way to get your debts under control and make a new start.
What Are My Options?
Before filing bankruptcy, you’ll need to consider all other avenues. If you are indeed insolvent with no other viable solutions, contact a local bankruptcy lawyer. Filing bankruptcy is the legal way to move from the state insolvency to a balanced budget. Our first step will be to conduct the
Your first step will be to conduct the means test to determine which chapter of bankruptcy will be most beneficial to you. If you have substantial income and property you’d like to protect, a Chapter 13, which reconfigured your debts, may be the best fit. You’ll make reduced payments over a 3-5 year period. When finished, most of your remaining debts will be discharged.
If your debt is completely overwhelming, a Chapter 7 might be your best option. Filing a Chapter 7 may involve surrendering some property, but you can use the available exemptions to protect as much of your property as possible. Most of these types of cases are considered “no asset,” which means the ability to keep your property while discharging unsecured debt.
Take the Next Step in Bankruptcy
Seeing no way out of your debt can be scary, but with the help of an experienced bankruptcy attorney, you can be confident that you’re taking the correct steps to put your debt behind you.