Though filing for bankruptcy is often regarded as a last resort, it may be the most valuable opportunity for you to start a new journey toward financial independence. However, it’s important that each and every option be evaluated ahead of time before making a final decision.
There are two common types of personal bankruptcy. In Chapter 7, many [if not all] of your debts are relieved in a process which takes three to six months. In Chapter 13, you use your own income to make affordable payments on your debts, which generally takes three to five years.
Will bankruptcy help you?
One of the most important considerations involves priority obligations, which are types of debt that cannot be eliminated or discharged by filing for bankruptcy. If these debts are your most significant, filing for bankruptcy may not be in your best interest.
Do you qualify for bankruptcy?
To be eligible for Chapter 7, your income needs to be low enough to pass a “bankruptcy means test.” To be eligible for Chapter 13, there are particular dollar limits which your debts cannot exceed. Generally, those with sufficient income to repay debts in a Chapter 13 plan will be ineligible for Chapter 7; conversely, those with too-low income and too-high debts may not be eligible for Chapter 13.
Are you facing a lawsuit?
Filing for bankruptcy implements an “automatic stay,” which immediately stops all collection efforts, including lawsuits, by creditors. If you are facing a lawsuit, bankruptcy may provide relief and help you eliminate underlying debt.
Could your lender repossess, or foreclose on, your property?
A lender may repossess/foreclose on property only if an individual defaults on his/her obligation to debts which are secured by property, such as a car loan or mortgage. This is why the “automatic stays” of bankruptcies are important, particularly in Chapter 13.
How much property do you own?
This is an important factor. In Chapter 7, there are exemptions which allow you to keep a specific amount of property In Chapter 13, you may keep all of your property, but you will owe an amount greater than or equal to the total value of your non-exempt assets to your unsecured creditors.
Should you choose Chapter 7 or Chapter 13 bankruptcy?
The most important factors in choosing between Chapter 7 and Chapter 13 bankruptcy are: the type of debts owed; your income and expenses; whether you own non-exempt property; and your goal (what you hope to achieve) by filing for bankruptcy.
For more information about bankruptcy, contact Agruss Law Firm, LLC, for a free consultation. We will discuss with you how to get a fresh financial start and immediate relief from creditors. We will examine your financial picture and walk you through all your options, including bankruptcy and the alternatives. We will handle your case quickly and advise you every step of the way.