Filing for bankruptcy can provide that much needed path out of debt and may give individuals an opportunity to get a fresh financial start. However, whether bankruptcy is the right choice for you is dictated by several factors, but most importantly, your specific situation.
Will Bankruptcy Help Me?
Before declaring bankruptcy, is important to evaluate all available options. Prior to filing your case, it is important to think about what you goals you wish you achieve by filing bankruptcy, and also what type of debts you have. Although a bankruptcy discharge eliminates most debt, there are still some debts that are non-dischargeable. This means that if you file bankruptcy, these debts will not be eliminated and you will be required to pay it back. Furthermore, you may also prefer to opt for debt settlement, but keep in mind debt settlement will require you to pay back the debt, whereas bankruptcy may completely eliminate the debt.
Do I Qualify for Bankruptcy?
The most commonly filed consumer bankruptcies are a Chapter 13 and a Chapter 7 – both of which have very specific eligibility requirements. In order to qualify for a Chapter 13 bankruptcy, in addition to several other criteria that must be met, you have to be able to afford your Chapter 13 bankruptcy payment plan. The Chapter 7 bankruptcy requires income to be low enough so you pass the bankruptcy means test.
What happens if I am facing a lawsuit?
Many creditors may take legal action against you for being delinquent on your payments. If a creditor successfully obtains a judgment against you in Court, it may place a lien on your assets, and even garnish your wages.
Bankruptcy law has an Automatic Stay Provision that strictly prohibits creditors from engaging in any collection activities against you including lawsuits. Filing for bankruptcy relief may help you prevent any further action by creditors, as well as eliminate that debt.
Can Filing Bankruptcy Prevent Repossessions and Foreclosure?
If you have any property that is serving as collateral on a debt, like in the case of a mortgage, your lender repossess or foreclose if you miss a series of payments. Filing bankruptcy may delay or stop the foreclosure or repossession process. If you file for a Chapter 13 bankruptcy, you will be able to:
• Make up missed payments
• Use the “cramdown” to lower your monthly payments
• Remove unsecured liens through “lien stripping.”
What Will Happen to My Property?
One of the most important factors to take into consideration is the amount of property you own. Bankruptcy exemptions protect assets up to a certain dollar amount.
Should I File A Chapter 13 bankruptcy or a Chapter 7 bankruptcy?
Once you have decided to file bankruptcy, as a consumer, you can either file a Chapter 13 bankruptcy or a Chapter 7 bankruptcy. Based on the type of debt you have, you income level, as well as the amount of property you own, it is recommended to speak with an experienced bankruptcy attorney to determine which bankruptcy Chapter is best suited for your situation.