People often think bankruptcy is where you turn too when no other options are on the table. Some see it as a second chance to rebuild finances within the confines of certain laws, while others see a stigma to bankruptcy that will haunt you as a failure, forever. The purpose of bankruptcy laws is not to be punitive but to help people obtain a restart to their finances. Whatever you choose, read on to learn more.
Reasons For Considering Bankruptcy
Medical debt and job loss are often quoted as the most frequent factors in driving bankruptcy but others include:
- A divorce
- Creditors who are suing because of unpaid debts
- Your home is in danger of being foreclosed
- Your only spending is with a credit card
- One credit card is utilized to pay the balance of another
- Looking at a 401K withdrawal to cover bills
Things To Consider
If you have enough resources bankruptcy can be avoided. Think about the following:
- Non-profit credit counseling agencies can help with a gratis service examining your finances and weighing up the possibility of a debt management program, maybe even a debt settlement or consolidation loan
- Making a monthly budget and living within it may be a great help as would obtaining a second job or selling some possessions to meet bills
- Is it possible to negotiate the debt?
- Is the current financial situation permanent or are things shortly to improve or worsen?
One last thing to consider: you may want to hold off committing money to a large bill or series of large bills that are upcoming until you have make a determination as to whether bankruptcy is the way forward, as it is possible, some of those bills may be dismissed.
Qualifying For Bankruptcy
There are two primary forms of bankruptcy for individuals:
Chapter 7 bankruptcy suits individuals who earn less than the median income for a family of your size in the state you reside in. If your income is too high, you may try and qualify for a ”means test.” In this situation a court trustee looks at your income and expenses to make a determination as whether these bills can be paid or do you really require the relief offered by a Chapter 7 bankruptcy.
Chapter 13 bankruptcy requires you have a steady and established income source as well as unsecured debts totaling less than $394,725 and secured debts totaling less than $1,184,200.
In Chapter 7 bankruptcy debts that can be wiped out include:
- Medical bills
- Credit card debt
- Lawsuit judgments
- Personal loans
- Obligations from contracts and/or leases
Chapter 13 bankruptcy includes the above as well as:
- Debts for loans from a retirement account
- Debts from divorce with the exception of support payments.
Debts that cannot be wiped out in either Chapter 7 or Chapter 13 bankruptcy include:
- Child support
- Student loans
- Debts for personal injuries causes when you were driving intoxicated
- Any outstanding court fines or penalties
- Debts owed to governmental agencies
How Bankruptcy Can Impact You
Make no mistake, bankruptcy will have a considerable impact to your life. Here are some of the ways it will change the status quo.
Your name will go public and may appear in the legal notices section of your local newspaper or if they are read out by a local media operation. Anyone who has an account known as Public Access to Court Electronic records) will also be able to see this and the meeting (which is mandatory) with creditors happens in a public forum and will also be marked on your credit report.
You can expect a drop of anywhere between 100 to 200 points from your credit score and Chapter 7 bankruptcy will remain on your credit report for ten years, and seven years in the case of Chapter 13 bankruptcy.
A co-signer on a loan will stay be responsible for the payment of aid loan even when the bankruptcy has been successful. However, Chapter 13 bankruptcy extends to co-signers as long as regular payments are made on your Chapter 13 agreement.
Bankruptcy And Your Home
It is essential to maintain payments on your home should you not want to lose it. A fresh start is a lot easier to capitalize upon when you are not homeless. But if you cannot afford your house it is very likely you will lose it. If you are in Chapter 7 bankruptcy you may be able to file for Chapter 13 bankruptcy, hence allowing greater time for you to catch up on house payments or the inevitable result is foreclosure. In Chapter 13 bankruptcy, you would return to your previously default status so your creditors can once again pursue you for payment.
Will Bankruptcy Help?
Although we cannot tell give you a yes or no answer to that questions we would ask you to consider the following: If in the next five years it will be impossible to get out of debt and you have diligently and thoughtfully researched the opportunities you may and may not have – then bankruptcy may be of benefit to you. One other thing to consider, we no longer have debtors prisons, you cannot go to prison for owing someone money.
Source: Should I File For Bankruptcy? – Do You Qualify & What Will Be The Impact https://www.debt.org/bankruptcy/should-i-file/
Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale
Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced bankruptcy lawyers will work with you to obtain the best possible outcome. You can on the firm to represent you well so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business Bankruptcy, Chapter 7 Bankruptcy, Creditor Representation, Chapter 5 Claims, Chapter 13 Bankruptcy, Business Restructuring, Chapter 11 Bankruptcy, and more.
*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.