Who Should Consider Filing for Bankruptcy?
Filing bankruptcy is ideally designed for individuals who feel as though they are overwhelmed by debts. A good rule of thumb to figure out if a debtor should file for bankruptcy is to take all your bills and add them up. Without adding any new debt to these bills if the debtor can’t pay them off in five or six years while still being able to maintain their household, they should consider filing bankruptcy. There are different chapters of personal bankruptcy to suit the needs of just about every debtor. Bankruptcy was created by Congress to give good hard working people a second chance and fresh start.
Filing Chapter 7 bankruptcy is king for those individuals with large amounts of unsecured debt. Many times an individual gets buried under a mountain of credit card debt and with rising interest rates and has no way of ever paying it off. Filing Chapter 7 bankruptcy will wipe out all unsecured debt including credit cards, medical bills, personal loans and payday loans. Once the bankruptcy is filed with the court an automatic stay goes into place stopping the creditors from harassing the debtor. Because of the automatic stay, the creditor is not even allowed to contact the debtor in an effort to collect on the debt. The automatic stay also stops foreclosure, lawsuits, wage garnishments and judgments. Many debtors enjoy the peacefulness of no longer being beat up and demeaned by their creditors.
When it comes to protecting property, Chapter 13 bankruptcy reigns supreme. Filing Chapter 13 will allow the debtor and their bankruptcy attorney to come up with a feasible repayment plan that will be repaid over a 3 to 5 year time frame. This will allow the debtor to get caught up on back payments while being able to keep their home. Since debts are paid by priority in a Chapter 13 bankruptcy, the secured debts like a mortgage or a car loan get paid first and the unsecured debts get whatever’s left over. At the end of the Chapter 13 payment plan any debts left unpaid in the unsecured category will be discharged in the bankruptcy filing.
Both chapters of bankruptcy are served best with the expertise of a bankruptcy attorney. The bankruptcy attorney will know how to use exemption laws to maximize protection of the client’s assets. The attorney will also know the timing of when to file for bankruptcy and to wait if it will benefit the client.
Getting answers to those tough bankruptcy questions needs to be thought of before you make a decision when it comes to your financial problems. Finding the answers to help you understand your situation more clearly can help you make an informed decision about filing bankruptcy. Take a minute to call or fill out the form to have a FREE NO OBLIGATION CONSULTATION with a bankruptcy attorney in your area.