Filing bankruptcy is a viable option for many indebted persons. You still have two types of bankruptcy you may be qualified to file. If you have lost your job and are over burdened with debt and you have no major assets to protect a Chapter 7 is probably best. If your home is mortgaged and you have a note on your car you may need to file a Chapter 13 in order to keep your home your means of transportation and any other items that secure a debt.
The chapter 7 bankruptcy wipes out all your debts if you pass the means test and are deemed unable to pay back any of your debts. You can file another Chapter 7 bankruptcy only after 8 years has passed. You can however file a Chapter 13 bankruptcy as soon as 4 years after your Chapter 7 bankruptcy is discharged.
Chapter 13 bankruptcy allows game-fully employed individuals the option to reduce their debts significantly to the tune of what they can afford to pay within a 3-5 year period. This provides enough relief for some. The filer pays a reduced sum into an account based on their income. If their income is below the state’s median income the payment plan is structured for 36 months. If your income is above the median income a 60 month payment plan is used.
Payments begin as early as 30 days after you file for bankruptcy. Payments are calculated after allowing for cost of living expenses like housing rent or mortgage payments food medicine utilities car payments etc. Priority debts must be paid in full (i.e. state and federal taxes). Unsecured debts are paid back at a rate or 0-100% of what is owed. Chapter 13 bankruptcy allows the filer to keep their mortgaged home or financed vehicles. Chapter 13 bankruptcies are usually discharged after 4 years and filers can file Chapter 13 bankrupties once every 2 years.
Consult a bankruptcy lawyer before you select the correct type of bankruptcy for you. The general guidelines are if you are below the poverty line for your state then you can file a Chapter 7 bankruptcy. If you make enough money to pay your bills but just need some relief due to excessive billing and threats of law suits filing a Chapter 13 bankruptcy will halt all collection activities and pending legal actions.
You should be certain bankruptcy is your only option before you proceed with it because of these facts. Bankruptcy stays on your credit report for 10 years. It lowers your score as much as 100 points. Continuing to have credit agency receive delinquency and slow payment report as well as notices of judgments against you also lowers your credit score. You have to decide which scenario is better for you in the long run. Will you be able to consolidate the debts and eventually repay all of them or do you need help resolving your debt? Is bankruptcy the most effective way for you to resolve your debt issues?
Sometimes bankruptcy is best because it resolves issues that have the potential for making your life very difficult. If having your check garnished would create hardship and cause you to have problems with your employer and maybe lose your job bankruptcy may be your best option. If creditors are repeatedly taking you to court and suing you bankruptcy may be right for you. Filing bankruptcy could put an end to this issue. You may be missing days at work for court appearances once again threatening your employment status. Filing bankruptcy may be the answer for this dilemma. After evaluating all the financial challenges you face and the actions your creditors have taken and will take it’s reasonable to decide to get immediate relief from all that stress by filing bankruptcy.
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