When should you consider bankruptcy. You have worked out a budget and cut your expenses but you still can’t pay your bills in a timely manner. Every time the phone rings you cringe because it is most likely a creditor and you know that you won’t be able to make the payment they are asking for. Your debt is spiraling out of control and you don’t know how to make it stop.
There are different types of bankruptcy that can help you alleviate your debt. It is important that you research your options. Hiring a bankruptcy attorney that can help you make the best decision for your circumstances is essential.
Start Fresh with Chapter 7 Bankruptcy
The most common bankruptcy is Chapter 7. This is the type that will “wipe out” or eliminate the majority of your debt, including personal loans, credit cards, medical bills, utility bills, etc. Depending on your circumstances, if you want to keep items that you have purchased such as your vehicle, then it is important to keep making payments on these loans so that they stay up to date. Your bankruptcy attorney can help you with these legalities. Chapter 7 will not eliminate your child support, student loans, most back taxes, or alimony. You will still be responsible for these debts after your bankruptcy has been filed.
When meeting with your attorney, you should discuss your circumstances and determine which form of bankruptcy will benefit you the most. After analyzing your situation it will be decided if you should take the Means Test. This test uses your debt, income, living expenses, and assets to calculate if you have the disposable income available to pay off your current debt in a reasonable amount of time. If your income is not sufficient enough to make these payments then you have passed the test and you are eligible to file for Chapter 7. It is an affordable and relatively quick process and will have your unmanageable debt eliminated in a few months.
Another Option With Chapter 13
If you take the Means Test and it determines that you have an excess of disposable income, then you will not be considered for Chapter 7 bankruptcy. This doesn’t sound reassuring and you are still probably thinking that you don’t have enough money to pay your bills. This is when filing for a Chapter 13 bankruptcy is your best option. Filing for a Chapter 13 doesn’t discharge all of your debt, but it does reconfigure it and make it manageable, based on your income. Payments will be reduced for 3-5 years, depending on your amount of debt. At the end of this time period most of your remaining debt will be discharged. With the type of filing you are allowed to keep your property and you only pay a portion of what you owed originally.
Ready to Get Started
If you are ready to start the process of filing for bankruptcy but have questions or need assistance, give us a call. Together, we can work through the process and determine which course of action is the best for your circumstances and if Chapter 7 or Chapter 13 bankruptcy is the right one for you.