Often, people find filing for bankruptcy one of the biggest life decisions they make. Bankruptcy can have a lasting impact on your credit report. Further, many people feel filing for bankruptcy is a sign of failure. Finally, still others find pride getting in the way of asking for help.
Bankruptcy isn’t easy, and it isn’t for everyone. If you are considering filing for bankruptcy, consider whether bankruptcy is right for you, understand the difference between Chapter 7 and Chapter 13 bankruptcy, and plan for your future. These bankruptcy basics should help you in your decision.
Is Bankruptcy Right for You?
Bankruptcy is a method of relieving you of your debt obligations, in whole or in part and providing a fresh start. Not everyone qualifies for bankruptcy. When considering whether you qualify, courts will consider your individual situation, including whether you are in a short-term crisis or facing long term financial problems. Some factors which may suggest bankruptcy is right for you include :
- Delinquent tax bills;
- A home near foreclosure;
- Your wages are being garnished for a financial obligation;
- You are being sued for past due bills; and finally
- You are currently unemployed and have been for some time, and your savings and unemployment benefits have been exhausted.
Understanding Chapter 7 Bankruptcy
Chapter 7 bankruptcy is fairly straightforward in its execution. Under Chapter 7, the process calls for liquidating all your assets. Next, the creditors receive the funds from your assets. Creditors include your bank, your credit card companies, and providers of medical services, etc. This process doesn’t’ take a lot of time. However, once complete, the Chapter 7 bankruptcy filing remains on your record for ten years from the date of filing.
The upside to Chapter 7 bankruptcy is you get a fresh start in a relatively short period of time. The downside to Chapter 7 bankruptcy is, with few exceptions, all your assets are sold to pay your debts. This includes the family home.
Understanding Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy allows filers to keep their home and other assets. In Chapter 13, your debts are reorganized between three and five years. During this time, the filer makes payments on their debts consistently. At the end of the period, the court discharges the balance of the debt. Chapter 13 bankruptcies remain on your record for seven years from the date of filing.
Planning for your Future
When someone is in the midst of evaluating whether bankruptcy is right for them, things can feel overwhelming. People also report feeling sad, frustrated, embarrassed, and dismayed. Most people feel a combination of different emotions when considering bankruptcy. The good news is, there is life after bankruptcy. While it may feel overwhelming in the moment, those who work regularly with bankruptcy clients know better days are ahead.
Considering Filing for Bankruptcy?
If you are considering filing for bankruptcy, or if you know bankruptcy is the right decision for you, contact the office of Kinnaird & Kinnaird, P.C. We have decades of experience handling bankruptcy cases. You don’t have to go through this alone. Our experienced bankruptcy attorneys understand every case is unique. Your specific situation, including your wants, needs, and hopes for the future, inform the decision of when and what type of bankruptcy is right for you. Contact us to discuss your situation today.