Is Bankruptcy the Best Choice for You?
Are you struggling with rapidly increasing debts and don’t see a way out? One of the best tools that we can suggest is bankruptcy.
When you are overwhelmed by medical or credit card debt, it is essential to consider bankruptcy as an option. Bankruptcy is regarded as a last resort, but bankruptcy may become your best option when you can’t afford to pay what you owe.
To determine your financial standing, take inventory of all your liquid assets. This should include college savings accounts, stocks, bonds, real estate, vehicles, and retirement funds.
If you find that your asset value is less than the amount of debt you owe, declaring bankruptcy may be the way out of a difficult financial situation.
Bankruptcy is an officially permitted course of action allowing you to repay your complete sum unpaid. Below are the obligations and qualifications required to file for bankruptcy.
Requirements for Bankruptcy
While bankruptcy is one tool that may give you relief from your unpaid loans, it is still not exactly a walk in the park. There are certain criteria that must be met before opting for bankruptcy:
- No Previous Records
As per the law, if you are planning to file for chapter 7 bankruptcy, you should have a clean record for the past eight years, which means you have not filed bankruptcy within that time frame.
- Ample Income for Approval
In the case of chapter 13 bankruptcy, the person filing will be required to prove that they have a regular source of income and may need to meet further parameters regarding annual salary.
- Wait if Rejected
For both chapters 7 and 13, getting denied means you’ll have to wait for another 181 days to refile.
Most Widespread Kinds of Personal Bankruptcy
The requirements and regulations for chapters 7 and 13 are the same across the board, globally. Chapters 7 and 13 are explained in detail below:
- Chapter 7
Chapter 7 of bankruptcy is most commonly known as “liquidation,” and it is the most immediate form of bankruptcy. Liquidation is preferable for those who owe unsecured amounts, such as credit card bills, personal loans, and medical expenses.
- Chapter 13
Chapter 13, which is another form of bankruptcy, also has a second name called “wage earners.” Compared to chapter 7, it is sometimes considered a more stable and reliable option as it converts your debt into a monthly payment plan for three to five years. Chapter 13 is for those who want to attain secured debts.
Importance of an Attorney for Bankruptcy Cases
At Pitts, Hay, and Hugenschmidt, we believe in clear, straightforward communication with our clients. “How does bankruptcy work?” is the most common question people ask us.
In short, hiring an attorney for bankruptcy cases is a must, and doing it without one can be complicated and arduous. Because filing for bankruptcy is such a lengthy process, it requires proper guidance and expert involvement. Give us a call to speak with a professional.
Bankruptcy is a legal process for those who wish to get a fresh start with their finances. When a person or business entity is no long...
Consequences and Outcome of Bankruptcy
Filing for bankruptcy often gives debtors the feeling of a fresh start. Chapter 7 (liquidation) wipes away your debt. Chapter 13 (the wage earners plan) gives you the ability to develop a three to five-year plan to repay all your debt.
It is a well-known consequence that bankruptcy is not going to leave a healthy mark on your credit report. But if you’re already considering bankruptcy, it’s likely that your credit score is already damaged. Your credit report may not endure that much more damage, especially if you remain consistent with paying your bills after declaring bankruptcy.
Depending on your case, a bankruptcy stays on your credit report for seven to ten years. A chapter 7 case is on your report for ten years, and a chapter 13 case is on your report for seven years.
You will likely suffer the loss of many of your assets, and it may add some temporary stress to your life. However, the trade-off is erasing most of or all of your debt. One factor that you should always keep in your mind is that once you file for bankruptcy, you cannot do so again for the next eight years.