How Do You Determine Whether Or Not You Should File For Bankruptcy?

How Do You Determine Whether Or Not You Should File For Bankruptcy?

There are several factors to consider before filing for bankruptcy.

1. Understand what bankruptcy choices you have. Out of all, only two types are commonly used in the United States, and they include – Chapter 7 bankruptcy: This bankruptcy is designed to eliminate most of your debts over a four to six month period. You might, however, have to let go of some of your assets. Consult with an experienced bankruptcy attorney to learn about the potentiality of your case and whether or not should you consider filing bankruptcy.

Chapter 13 bankruptcy: This bankruptcy might seem a tad more complicated than the previous one, for it requires you to repay what you owe over a predetermined period. In Chapter 13 bankruptcy, your repayment plan is based on your debt pattern and income. But again, you should not file for it without consulting with an attorney.

2. Look for alternatives – People don’t file for bankruptcy unless it’s the last resort. Hence, it’s a wise idea to look for an alternative before filing for it. However, you can’t determine the right alternatives, even if they are lying in front of you. To carefully judge your situation and the need for bankruptcy is a real tough job. You might find bankruptcy not being the only option, but some financial crisis cannot be fixed with just a few changes in your expense pattern.

3. Be sure you’re eligible to file the type of bankruptcy you want – To file for bankruptcy comes with sure ‘ifs’ and ‘buts.’ Not everybody can qualify to file bankruptcy, even if it’s their only last resort. Now, how do you determine if you are eligible to file it?

There are circumstances when you are although eligible to file for Chapter 13 bankruptcy, but Chapter 7 bankruptcy is still unapproachable. Each bankruptcy type has a respective set of requirements for you to meet and benefit from it.

To speak in general, Chapter 7 bankruptcy is commonly used since it’s designed to wipe off most of one’s debts right away except for unpaid withholding tax, income taxes, social security tax, and other back taxes or tax penalties and mortgage debt. Chapter 13 bankruptcy is least preferred because the filer is pushed into a repayment plan, which means you’ll pay off as much of your debts as possible until the court eliminates the remainders.

4. You’ll want to consult with an attorney to figure out which of your debts can and can’t be paid off. Certain types of debts, for example – alimony and tax debts, child support cannot be eliminated in a bankruptcy proceeding, irrespective of what kind of bankruptcy you’ve filed for.

5. Learn what will happen to your assets, such as your car. The decision is typically based on what are their usages and what property exemption rules are available to you. In case, for example, you have already put up your car or boat as a collateral on any of your loans, making it secure, creditors might still be able to claim the asset even though you’re in bankruptcy.

You should never file for bankruptcy until you are assured that it’s the only last resort available to you.

Recovery Law Group – one of the largest trusted consumer protection law firms – can take your case right away for a comprehensive review, consultation, and offering customized bankruptcy solutions.

For an immediate bankruptcy consultation, call 888-297-6203.