When you are in a very tough financial situation and have little or not enough income to pay off debt and you have looked into all the potential debt relief options, filing for bankruptcy may be your only possible alternative for debt relief.
What is bankruptcy?
Bankruptcy is a process that allows you to discharge the debts when you are no longer able to pay your creditor back the debt you owe in a certain time frame.
The main objectives of filing for bankruptcy are to give the debtor a fresh start, and /or pay the creditor back as much as possible without placing too much financial burden on the debtor.
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Most common bankruptcies are Chapter 7 and Chapter 13
If your income is lower than half of the state average income, Chapter 7 can be considered. It basically discharges all applicable debt and must liquidate any of your assets that are not exempt under the law.
On the other hand, if your income is higher than your state median income, Chapter 13 typically will be applied. It allows you to repay part of the debt over a 3 to 5 years period. Besides that, you may choose to keep certain property instead of relinquishing it as part of Chapter 7 bankruptcy procedures.
How to file for bankruptcy?
The first step is to find out if you are eligible for filing for bankruptcy and under which chapter. Each chapter has its own filing requirements, which must be complied with exactly as required under the bankruptcy laws. Therefore, it is always recommended that you hire a bankruptcy lawyer to help you. However, an experienced bankruptcy lawyer may charge you between $1500 and $5000.
Presenting all the documents in the correct forms is critical while filing for bankruptcy. Any deviation can result in rejection of your case.
As for how to divide your assets among your creditors, it is up to the court. The court treats each case on its specific merits and on the person's available assets level. In some occasions, the court allows you to retain your house while your other assets are distributed among the creditors.
While there are so many debt relief options, not all options work for everyone. Filing for bankruptcy is never an easy decision and always is the last resort. For those who have a positive attitude, bankruptcy can be seen as leaving behind the severe mistakes of your past and looking forward to a fresh new start.
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Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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