If you are crushed under overwhelming debt and struggling to regain control of your finances, bankruptcy could give you the clean slate you need. But while filing bankruptcy offers many benefits, it is an important decision that you shouldn’t make lightly. If you are wondering “is bankruptcy right for me?” it’s best to speak to an experienced North Charleston bankruptcy attorney who can help you weigh your options.
What Benefits Does Bankruptcy Offer?
Bankruptcy Can Eliminate Debt
Perhaps the best benefit of bankruptcy is that it allows you to eliminate most of your debt. Not all debt can be eliminated through bankruptcy, but it can give you enough breathing room.
Bankruptcy Can Temporarily Stop Foreclosure or Repossession
You can stave off foreclosure or repossession through an automatic stay, which is issued the moment you file. The stay will effectively prevent any of your creditors from collecting on your assets. However, keep in mind that this stay is only a temporary solution. You will still need to come up the funds to pay off your debt or proceed through the bankruptcy process to permanently stop foreclosure or repossession.
Bankruptcy Can Stop Wage Garnishment
Just as with all creditor actions, once you file for bankruptcy all wage garnishment must stop. Again, though, this is a temporary solution. If you hold mostly nondischargeable debt or you do not meet the qualifications for bankruptcy, then once the stay is lifted, your creditors can go back to garnishing your wages.
Bankruptcy Will Stop Creditor Harassment
Sometimes the worst part about crushing debt is the constant harassment from creditors. You can put an end to that harassment by filing for bankruptcy. Your creditors will need to speak to your attorney if they wish to contact you.
Which Type of Bankruptcy Is Right for Me?
In addition to answering the question “is bankruptcy right for me?” you must also ask yourself”which type of bankruptcy is right for me?” Essentially, there are two types of bankruptcies individuals can file under:
Often referred to as a liquidation bankruptcy, Chapter 7 is perhaps the most common and fastest type of bankruptcy. Since Chapter 7 entails selling off assets in order to repay creditors, you may want to consider filing for this type if you own mostly exempt property, have assets protected by exemptions, and hold mostly dischargeable debt. Credit card bills, medical expenses, and personal loans are all examples of dischargeable debt.
To qualify under Chapter 7 you must pass the Means Test. This income-based test examines whether you have enough disposable income to repay your debts.
Often referred to as a reorganization bankruptcy, Chapter 13 allows you to restructure your debt into a reasonable payment plan that spans a period of three to five years. At the end of your payment plan, any remaining debt is effectively discharged.
If you do not qualify for Chapter 7, you more than likely will for Chapter 13. Basically, qualifying for Chapter 13 simply requires receiving a steady income, since you must continue to make regular payments until your plan ends. This is also a great option if you have a lot of non-exempt property that you wish to keep and if you hold mostly nondischargeable debt.
When Isn’t Bankruptcy a Good Option?
While there are many pros to bankruptcy, it’s important to be aware of the cons as well. For example, Chapter 7 will cause your credit score to take a negative hit to your credit score. This could be an issue if you’re considering buying a home or borrowing money anytime soon.
You should also reconsider filing bankruptcy if you:
- Recently filed bankruptcy
- Had a bankruptcy case dismissed in prejudice
- Are guilty of defrauding your creditors
- Will likely incur more debts
- Have loans that are cosigned
If you decide that bankruptcy is not the best option for you, a bankruptcy attorney can help you find alternative debt relief solutions.
Is Bankruptcy Right for Me? Speak to a Bankruptcy Lawyer
To learn more about whether or not you should file bankruptcy, and which chapter you should file under, consult with an experienced North Charleston bankruptcy attorney. Contact Steadman Law Firm, P.A. today.