When should you file for bankruptcy? | On your debt

Bankruptcy is designed to give people a fresh start when needed

It is never fun to consider declaring bankruptcy. But believe it or not, bankruptcy can be a smart financial decision in certain situations. Bankruptcy is designed to give people a fresh start when they need it. And, if you file for bankruptcy, you are taking a big step towards controlling your finances. It is always a responsible goal.

But it is a serious decision with consequences. Your credit rating may take a temporary hit (as you may already know) and your spending habits may need to change. How do you know when the advantages of bankruptcy outweigh the disadvantages?

First of all, know the basics of what bankruptcy does. Bankruptcy can eliminate all of your debt, but the courts treat different types of debt differently. It is therefore important to know what type of debt you have.

Below are the debts that end or facilitate the payment of overtime:

  • Credit card debt
  • Mortgages
  • Auto loans and lease obligations
  • Medical debt
  • Obligations relating to leases of apartments and houses
  • Utility bills
  • Old cell phone and cable / satellite bills
  • Judgments in court
  • Personal loans
  • Payday loans

Below are a few debts that bankruptcy has little or no direct impact on. However, as your other debts are discharged or reduced, they should become more manageable.

  • Student loans
  • Some (but not all) back taxes
  • Support for spouses and children
  • Fines and court costs
  • All the debts you forgot to list in your bankruptcy documents

If any or all of the following circumstances apply to you, it may be time to file a claim:

  • Creditors sue you or seize you over unpaid debts
  • You risk foreclosure or eviction
  • You are facing the repossession of your vehicle
  • You plan to pay off your debts with debts – Debt Consolidation Loans and Credit Card Cash Advances
  • Pay off today’s debt while jeopardizing your future using retirement funds

Bankruptcy eligibility

The two types of bankruptcy most often used by individuals are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy requires that a filer pass a means test to determine eligibility. The means test can be complicated and it is best to consult an experienced lawyer to determine its impact on an individual filer. Simply put, any debtor with an income below the median should pass the means test and be eligible for Chapter 7 bankruptcy. Those with a median income above the median will have to go through a series of calculations involving the average income. , federal guidelines and actual expenses to determine eligibility. Importantly, many tax filers with income above the median, with the help of an experienced lawyer, will be able to pass the means test and be eligible for Chapter 7 relief.

Chapter 7 Bankruptcy

Otherwise known as “outright bankruptcy,” Chapter 7 is designed for people who have no way of paying their bills otherwise. This type of bankruptcy frees as much of your unsecured debt as possible, including credit card debt, lawsuits, payday loans, personal loans, medical bills, and any other associated unsecured debt. The secured debt can also sometimes be canceled or amended depending on the applicable exemptions and the depositors’ needs for the assets securing the debt after the petition.

The process usually takes between four and six months. This is usually much faster than Chapter 13 bankruptcy. In the vast majority of Chapter 7 bankruptcies, the filer is able to protect their home, car, and other property. But every case is different, and it’s important to have the advice of an experienced lawyer to be sure that your applicable exemption will allow you to protect your assets. Otherwise, the bankruptcy court may be empowered to liquidate your non-exempt assets.

If you are able to pass the means test and protect your assets with the applicable exemptions, Chapter 7 bankruptcy may be your best option. Otherwise, Chapter 13 bankruptcy may be a good alternative.

Chapter 13 Bankruptcy

Also known as “reorganization bankruptcy” or “employee bankruptcy,” Chapter 13 is designed for people who have a constant income and want to keep assets that could not be protected in a Chapter 7 bankruptcy. Chapter 13 can also enable a filer to deal with and predict debts that would go unpaid in a Chapter 7 bankruptcy by offering a three to five year plan to make payments for their debts. The plan, once approved by bankruptcy court, can provide significant relief beyond simply forgiving debt. An experienced bankruptcy lawyer may be able to help craft a plan that reduces the amount of debt, makes up for house or car late payments, lowers interest rates, protects co-signers, and more. again.

Bond & Botes helps people with debt

Bond & Botes lawyers have dedicated decades to helping people solve their debts and move towards a more stable financial future. We know how important accurate information is, so we offer free consultations from the comfort and security of your home or office. We can meet by phone and / or video. Let us solve your financial problems. There is no obligation, and that means there is no downside to putting together the information you need to make good decisions on how to break the stress cycle of debt and move on. the front. We can answer all of your questions regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping a foreclosure or wage garnishment, avoiding lien, stopping lawsuits, ” medical debt, personal loans, payday loans, credit card debt, etc. We can relieve your stress! We want to help you and we can help you!


Bond, Botes, Sykstus, Tanner & McNutt, PC

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