Whether you’re upside down in debt because of being unemployed, too much spending, medical bills, college tuition or anything else, you should know that you’re not alone!
Last year, almost 773,000 individuals found themselves in the same situation.
You at one point or another might have considered filing for bankruptcy. Bankruptcy can help those in financial distress get a fresh start and start over again.
Does Bankruptcy Really Work and is it the Right Fit for You? Here is what you need to know
When is a Good Time to Consider Bankruptcy?
Anytime your income is insufficient to pay your debt while also maintaining your household expenses, bankruptcy is an option worth looking into. Matthew C. Cherney, a bankruptcy attorney, says that a good rule of thumb is to take a good look at the total amount of debt that you owe. If the monthly expenses associated with servicing the debt comes close to, or exceeds your monthly income, then you may be an ideal candidate for filing for bankruptcy.
Some debts such as child support, income taxes and student loans cannot be discharged in bankruptcy, so one should really consider monthly figure as an expense, rather than a debt.
In Georgia and other states, the bankruptcy laws require many different forms and schedules to be filed with a bankruptcy . These forms also depend on the chapter of bankruptcy. Some of these forms are Chapter 7 and Chapter 13. Let’s explore these in detail.
Chapter 7 Bankruptcy
Chapter 7 is commonly referred to as a “liquidation” bankruptcy. Chapter 7 is oftentimes associated with what people think of when they think of bankruptcy. A business bankruptcy would be a Chapter 11.
After your bankruptcy attorney files your paperwork, the judge will appoint a “trustee.” The trustee’s job is to investigate your financial affairs search for any assets, and, if appropriate, sell, or liquidate these assets, and pay any monies to your creditors.
You are allowed certain exemptions to protect your property, and this situation only becomes relevant when the value of your assets exceed your exemptions. If that is the case, you may want to consider a chapter 13 bankruptcy in order to protect your assets.
Did you know?
Abraham Lincoln filed for bankruptcy in 1838. Prior to the Civil War, Abraham Lincoln had considerable debt associated with the purchase of several general stores.
Chapter 13 Bankruptcy
If you do not qualify for chapter 7, or are attempting to protect your assets and have regular income, chapter 13 may be a better solution for you. In chapter 13 one can propose a plan to pay back their debt (or a portion thereof) over three to five years.
Another benefit is that Chapter 13 can treat certain debts that are not dischargeable in chapter 7.
What is the Immediate Benefit of Bankruptcy?
The one thing that ALL forms of bankruptcy have in common is the wonderful feature known as the “Automatic Stay.”
Immediately upon filing bankruptcy, the automatic stay prevents most creditors from collecting any outstanding debts.
- No more lawsuits;
- No more harassing phone calls;
- No more “Final Demand” letters sent to your home;
Instantly all of these things that keep you up at night, as well as any outstanding debt- are all washed away, or “discharged,” in legal terms.
Read more about Automatic Stay
What is the Negative Impact of Filing for Bankruptcy?
After filing, your credit score will be impacted. However, if your credit score is already rather low, the impact will be nominal. Bankruptcy will remain on your credit report for a period of years (depending on the chapter); however, this time frame may pale in comparison to the length of time necessary to pay back your debt. You will also be surprised at the amount of credit card offers you’ll receive after your bankruptcy is discharged. When used responsibly, a credit card is an excellent way of building your credit back up.
So is Filing For Bankruptcy a Good Thing?
The thought of bankruptcy may be unpleasant, but you will not believe the relief you feel after filing. Filing with a trusting attorney should make it a pleasant experience. Nobody ever wants to end up filing bankruptcy, but it can be a better alternative to harassing phone calls, intrusive letters, lawsuits and garnishments.
If you or someone you know is going through hardships due to outstanding debt, give our office a call today and speak with attorney Matthew Cherney of Cherney Law Firm, LLC.