If you are having a hard time paying your bills and have thought about bankruptcy, there are a few things you have to know before taking that next step. Bankruptcy is the legal process of helping people who cannot pay their bills. It allows debtors to eradicate some or all of their debts and get on the path to monetary stability. Filing for bankruptcy can halt home foreclosure and repossession, or other actions taken on behalf of debt collectors. But there are other facts about bankruptcy that you should consider before using this tool as a financial restart.
Why would someone file for bankruptcy?
When someone’s debts vastly exceed what they earn, bankruptcy may eventually be needed. Bankruptcy allows certain debts to be discharged entirely, but not necessarily all of them. The debtor can sell assets, or enter a payment plan to amend at least a portion of their debts. The debtor may be able to protect their property from collection, eliminate liens on property, or at minimum get some space for a serious financial reassessment.
What is the “automatic stay”?
The automatic stay is enforced once a debtor files for bankruptcy. What this means is that creditors are not allowed to contact the debtor or take actions against them for unpaid debts. A debt collector who violates the automatic stay must be swiftly stopped with intervention from a reputable legal professional, such as a bankruptcy attorney from The Law Offices of Ronald I. Chorches. Sometimes debt collectors go too far in pursuing unpaid debts, and may be found in breach of the debtor’s protections under bankruptcy.
How many bankruptcy chapters are there?
There are six bankruptcy chapters for debtors to choose from, however, not every chapter will be beneficial to every person. The debtor must consider their preferences in either keeping their assets or engaging in a repayment plan. For example, there are bankruptcy chapters that allow debtors to sell their property in exchange for using that money to settle debts with creditors. But for others, they may prefer to keep the property they have and commit to a repayment of most or all of their debts within a span of 3-5 years. A debtor can discuss their situation with a bankruptcy lawyer, such as a team member from The Law Offices of Ronald I. Chorches, who will then offer advice on which chapter is going to help them the most.
How do I know I am eligible for bankruptcy?
Each bankruptcy chapter has its own standards, and not every person’s situation will be appropriate for every chapter. What will happen is your lawyer will have you take an income means test to determine if you are eligible to file for bankruptcy. The numbers for the means test will vary based on your income, number of people in your household, the amount and type of debts you have, whether you prefer to sell assets or participate in a repayment plan, and more.
Bankruptcy is a financial resource that can be utilized by individuals, business, or municipalities. Debtors who feel overwhelmed with their current financial situation may benefit from the financial restart that bankruptcy can offer.