Are you in the midst of serious financial struggles? If so, you are not alone. These are difficult economic times for our country and many are suffering as a result. If you find yourself unable to keep up with minimum payments to your creditors or are facing potential collection actions such as foreclosure on your house, bankruptcy may provide you with much-needed relief. Sometimes, we face financial turmoil that seems to be without end. Bankruptcy is an option for those that want a fresh start. Here, we discuss some things you may want to consider when deciding whether or not you wish to pursue bankruptcy.
Is Bankruptcy Right for You?
Bankruptcy may have an ominous sound to it, but it is not as scary or unapproachable as many make it out to be. In fact, bankruptcy can be a light at the end of a tunnel for many in the middle of a financial struggle. Filing bankruptcy will halt collection efforts such as the seemingly endless phone calls from collection agencies and the garnishment of wages, in some cases.
Before proceeding with bankruptcy, you may want to see if there are any alternatives available to effectively manage your debt. Sometimes, creditors are open to negotiating the repayment of outstanding debt. There may also be help available from a credit counseling agency.
Once you evaluate your options, a good place to start in deciding whether bankruptcy is right for you is to do some research on the different types of bankruptcy. Most individuals opt to file for chapter 7 bankruptcy or chapter 13 bankruptcy. In chapter 7 bankruptcy, many or all of your debts can be discharged outright. It is usually a process that takes no more than 6 months. In chapter 13 bankruptcy, you are put on a structured payment plan designed in a way that allows you to still adequately cover your cost of living expenses while you work to pay back your creditors. Each of these bankruptcy types has different requirements. There is a strict income requirement for chapter 7 bankruptcy, in particular. Take a look at which one you may qualify for. It can make all the difference.
When you see what form of bankruptcy may be available to you, explore what debts will and will not be discharged, or canceled, by the bankruptcy. After the bankruptcy process is done, what debt, if any, will you be left with? Certain debt obligations, such as outstanding child support payments, will not be discharged in bankruptcy. Additionally, many types of student loans, particularly those held with the federal government, will not be discharged in bankruptcy. If this is the type of debt you are mainly struggling with, bankruptcy may not be the best option for you. You should consider, however, that debts discharged in bankruptcy may free up your income to go towards paying down other, non-dischargeable debts.
You should also review bankruptcy exemptions. Bankruptcy exemptions protect certain property from being sold off during bankruptcy proceedings. If you have property that will not be protected by exemptions that you wish to hold on to, bankruptcy may not be right for you.
Bankruptcy laws are complex. The team of knowledgeable bankruptcy attorneys at Regal Tax & Law Group are here to unravel these complex laws to help counsel you on whether or not bankruptcy is a good option for you. Contact us today.