Having outstanding debt hanging over your head can be stressful, but when even minimum payments are impossible, the situation can be too much to handle. It’s time to take some serious action, starting with taking a hard look at your budget and cutting out the things that aren’t necessary. You can also work with your creditors to get reduced payment plans or interest rates to make your monthly expenses more manageable. Still, it may get to the point where your best option is to file for bankruptcy, which can be a welcome relief. Although bankruptcy can cancel many types of debt, you may be concerned about the immediate and long-term consequences of filing. You may have heard stories of people losing everything they owned, just to get out of debt, but there are many safety nets in place to protect your assets and livelihood.
for your benefit
The purpose of bankruptcy is not to leave you destitute as punishment for your debt; was created to ensure that consumers have a way out of debt and the opportunity for a fresh start. This does not mean that you will experience zero losses as a result of your bankruptcy. Depending on your income, debts, living expenses, and the type of bankruptcy you choose, the court may need sixteen of your property and sell it to pay your creditors. Fortunately, there are many exemptions that we can use to protect your assets and property.
Chapter 7
The first decision we will make is choosing which bankruptcy chapter will work best for you. We will perform a means test, which determines if you have the “means” to pay your debt, based on the details of your situation. If you pass the test, you are eligible for a Chapter 7, which discharges unsecured debts. Most people who file Chapter 7 can keep all of their assets because these cases are usually “no assets” cases. If you have secured loans, such as a car or home loan, you can choose to keep the property as long as you keep up with the payments and keep the property insured. If, after reviewing your budget, these payments are no longer reasonable for you, you may choose to terminate the loan by returning the property. The court trustee can then decide if it would be beneficial to reimburse the creditor for the remaining value.
Chapter 13
A Chapter 13 may be a good choice if you have assets that would be lost in a Chapter 7 (or if you don’t pass the means test). This resets your debts and makes payments to the court over 3-5 years. This would be considered payment in full of your secured debts, and after your payment period, any remaining unsecured debts are discharged. A Chapter 13 allows you to keep your property while dealing with your debts.
dont wait
Many people avoid filing for bankruptcy because they fear the consequences and worry about losing their property, when in reality, it may be the best choice they ever made. If you are confused about your options, please give me a call so we can discuss your situation.