Bankruptcy can be beneficial for some individuals, with assets such as a home, vehicle, or property to protect from creditors. For others, the filing effort and credit impact outweigh the benefits. If you have significant amounts of debt from sources such as medical bills, credit cards, mortgages, or personal loans, you may speak with a licensed bankruptcy lawyer who can review your situation and determine if bankruptcy is a good fit.
Generally, federal law governs bankruptcy proceedings, although each state has their own specific rules for filing for bankruptcy. There are two common types of bankruptcies available for individuals: Chapter 7 and Chapter 13. Both types of filings allow individuals to protect part of their assets, commonly referred to as “exempt property.” Generally, exempt property is protected from creditors.
In Chapter 7 bankruptcy proceedings, a person usually lists the specific items of property that they wish to exempt. All of their other property is then liquidated or sold to pay off their debts. Although Chapter 7 bankruptcies are relatively simple, they are reported on a person’s credit report for the next 10 years.
By contrast, in a Chapter 13 bankruptcy, an individual must reorganize their property and submit a plan to pay off their debts in 3-5 years. To qualify for a Chapter 13 bankruptcy, an individual must generally have sufficient disposable income to fund a repayment plan. However, a Chapter 13 bankruptcy only remains on a person’s credit report for a maximum of 7 years.
Hiring a qualified bankruptcy lawyer may be critical for filing for bankruptcy correctly. For example, a bankruptcy lawyer could review an individual’s finances and assets, and could then recommend whether a Chapter 7 or Chapter 13 filing would be more beneficial.
A lawyer could also be invaluable in helping clients with other parts of the bankruptcy process, such as:
Above all, a qualified bankruptcy lawyer could help ensure that those filing for bankruptcy are informed about the different steps of the process and that the entire bankruptcy proceeds smoothly.
If you are wondering whether you should file for bankruptcy, be sure to obtain the legal representation you need to make informed decisions about your financial future. Even if you have large amounts of debt, a bankruptcy filing may help you get back on your feet.
For further information about the bankruptcy process and how it could benefit you, start your search for a local bankruptcy lawyer today.