Many people know a little bit about bankruptcy. Usually a bit about being in debt and filing for it to get out of debt. There is a lot more going on under the hood besides that though. We’ve got a great advisory piece on the basics of bankruptcy here. Knowing the basics is great and all, but even after that many people may be wondering “is declaring bankruptcy right for me?” Let’s find out.
There are two different kinds of bankruptcy to file: Chapter 7, and Chapter 13.
Chapter 7 can be filed by either an individual or a company. You are given a few exemptions for things such as equity in your home, car, and some household items. Besides that, a trustee will sell your belongings over the course of 4-6 months and your debt is forgiven. For a secured loan (such as your car or house) you have the choice of either allowing the creditor to repossess the property, or to continue making payments on it.
Also known as “wage earner” bankruptcy, this option is more along the lines of re-evaluating a payment schedule. A Chapter 13 repayment plan depends on your earnings. It’s the most important part of the case. When filing for this type of bankruptcy, you’ll outline a detail 3-5 year repayment plan. The plan must be approved before anything is permanent. Commonly, Chapter 13 allows individuals to catch up on past-due home or car payments and avoid foreclosure or repossession.
Is It For Me?
After this brief overview, it comes time for the important bit. Which type of bankruptcy you should file for depends entirely on your financial situation. If you’re just flat out broke then it’s Chapter 7 time, but if you have a steady paycheck 13 may end up being better for you.
Before we get to that part, though, it’s important to find out if you should even file. Bankruptcy is excellent at getting rid of certain kinds of debt, and can’t touch other kinds.
-Credit Card Loans
-Bill Collector Harassment
-Some Legal Fees
-Auto Accident Claims (Outside of drunk driving)
So to answer the question of “is bankruptcy right for me?”, it really depends on why you want to file it. Credit Card debt is definitely solvable, but you cannot fix certain things. I absolutely recommend meeting with us to figure out a great plan of action. We’ll work with you on the best course of action possible for your specific situation, and ensure your 2018 gets off to a great start!