Is debt affecting your life or are you facing threats of foreclosure and repossession? You may feel daunted by your circumstances and unsure of what to do next, but, fortunately, you have options, and filing for bankruptcy may be beneficial to you. Many consumers choose Chapter 7 bankruptcy as a way by which they can confront their debt and secure a strong financial future, but not everyone is eligible.
Determining eligibility for Chapter 7
According to bankruptcy laws, anyone who wishes to complete the Chapter 7 bankruptcy process must pass the means test. This test will subtract your expenses from your monthly income. If your disposable monthly income is over a certain amount, you will not be able to file for Chapter 7 bankruptcy.
If you are ineligible for Chapter 7, that is not the end of your legal options. At this point, it may be most beneficial to seek bankruptcy protection under Chapter 13.
The benefits of Chapter 13 bankruptcy
Chapter 13 bankruptcy offers many benefits to consumers, but it takes significantly longer to complete this process than it does Chapter 7. Over a period of three to five years, those approved for Chapter 13 bankruptcy will pay off their debts. This type of bankruptcy includes the following benefits:
- Reorganization and reduction of many types of debt
- Protection from creditors and collection agents
- Halts the foreclosure process
- Has exemptions to keep certain assets
- Opportunity to rebuild credit after process is complete
- Stops the repossession process
Student loans are one of the most common types of debts, yet these balances are not eligible for discharge in the bankruptcy process. However, Chapter 13 may offer applicants the opportunity to consolidate these balances and stop wage garnishment, providing you have the financial capability to make payments on a consistent basis.
Do you really need a lawyer?
The decision to file for bankruptcy is a serious choice, and you must carefully consider all options before moving forward with the application process. Whether you are eligible for Chapter 7 or Chapter 13 will depend on the type of debt you have. A complete case evaluation with an experienced attorney can clearly identify the best choice for you.
You should not attempt to navigate the bankruptcy process alone but should secure the help you need to make the best choice for your unique circumstances and individual objectives.