If you’ve been considering filing for bankruptcy it can be extremely difficult to decide if it’s the best option for you. It isn’t a decision that anyone should take lightly and while it may vastly improve some short-term problems you’ve been struggling with, there may be serious consequences in the long run. If you stay informed and keep the risks in mind, there are advantages to choosing to file for bankruptcy. If you’ve been working to overcome overwhelming debt for a long time, and your credit score has already dropped significantly, declaring bankruptcy may actually help your credit score improve over time. Often times people feel obligated to pay off their debt on their own, but sometimes it has already become too late for that. For those who are burdened with insurmountable debt, filing for bankruptcy can provide an opportunity for a fresh start and some may be eligible to have their debts completely discharged.
If you have decided that bankruptcy is the only option available to manage your debt, the process will require between three to six months of filing and petitioning before your debts are either liquidated or you are put on a repayment plan. A detailed assessment of debts, assets, income and living expenses is required, and your eligibility for certain chapters of bankruptcy will be determined based on a means test. Filing properly and assessing your debt and assets can be difficult to tackle without an bankruptcy attorney, so it’s important to find a representative. Depending on the complexity of the situation, proper counsel could prevent vastly unnecessary loss of time and expenses. It may be risky to attempt to file on your own, and as the documents are usually complicated it can be easy to make errors.
It can be confusing to understand the difference between Chapter 7 and Chapter 13 bankruptcy, and which you will be eligible for. During the filing process, you will be given a means test to determine what your options are. Those whose average wages for the last six months fall below the typical income for their state will be eligible for Chapter 7 filing under the Bankruptcy Code. Filing under Chapter 7 will absolve you from all eligible debts, but it will entail the liquidation of all nonexempt assets, including any eligible property and possessions. Chapter 13 can often be a good choice as, although it not a complete liquidation of debts as in Chapter 7, it involves a plan for repayment of any debts. Slowly getting ahead of debt through scheduled payments can be a great idea, as showing willingness to repay any creditors will also give individuals the opportunity to save their homes from foreclosure. Choosing which option is the best for you isn’t easy, but we can help you decide the most important factors to consider based on your finances and property situation.
A bankruptcy trustee is an impartial court-appointed person, who oversees the bankruptcy estate and will review any petitions filed for bankruptcy. It is their responsibility to verify income, debt and expenses. In Chapter 7 bankruptcy, they will also take over the assessing and selling of the debtor’s property and distribute the funds to creditors, whereas in chapter 13 they will assess the debtors repayment plan. The trustee acts as an intermediary between the debtor and their creditors, and works to maintain the interests of both parties.
Depending on which chapter of bankruptcy you choose, there will be some property you will be able to retain, while you may lose any valuable possessions or property that are eligible for seizure. Some assets are exempt from creditors, and these may include necessities such as kitchen items and clothing, tools that are necessary for a person’s income, or any benefits held in a bank account. There are many different cases for what can and cannot be claimed by creditors, so it’s important to know what you may be giving up before you file for bankruptcy.
It is essential to get counsel before making any decisions about how and when you should file, and there are further stipulations to consider when filing. Contact the Santee Legal Center for a free consultation and to get more information about whether bankruptcy is the best option. We can often accommodate appointments after regular work hours and on weekends. Together we will make sure that filing for bankruptcy is absolutely necessary, and determine the next steps in addressing your financial concerns.
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