When it comes to bankruptcy, people generally fall into one of two camps: those who aren’t sure what it means to file bankruptcy but think they should, and those who know what it means to file bankruptcy and aren’t sure if they should. Both types might not know when to file bankruptcy, how to file bankruptcy, or where to seek bankruptcy help.
It’s not hard to see why so many people need help filing bankruptcy. The laws governing bankruptcy are complex and confusing, and trying to file without the help of a bankruptcy lawyer can cause errors and mistakes that will cost you time and money. It can even get your case thrown out of court.
You can go over the finer points of your case with a local bankruptcy attorney, but in this post, we’ll explore what it means to file bankruptcy.
Bankruptcy occurs when you can’t afford to pay the amount you owe. Some danger signs include calls from bill collectors, overuse of credit cards, only making the minimum payments on your credit cards, and using credit cards to pay for your necessities.
If you’re considering debt consolidation, you don’t know how much you owe, or you get panicked sorting out your finances, it’s probably time to at least explore the option of declaring bankruptcy.
Try to evaluate where you are financially. Do your liquid assets (including resources like vehicles, real estate, retirement funds and savings accounts) amount to less than what you owe when you add up your bills and credit statements? If so, bankruptcy might offer a way out, but it’s not without consequences.
Filing for Chapter 7 bankruptcy, or “straight bankruptcy,” allows you to liquidate your assets into cash to pay off your debt. The bankruptcy record will stay on your credit report for 10 years after you’re discharged, but you can still make a fresh start with a report like that.
However, individuals with family homes or assets they want to keep may want to consider Chapter 13 bankruptcy, or “reorganization bankruptcy.” Chapter 13 bankruptcy allows you to pay off your debt over three to five years. It’s ideal for people with predictable incomes, and will keep debtors off your back. You’ll also be able to keep your possessions.
Talk to a lawyer to find out what bankruptcy would mean in your case and how to proceed from here.