Entering into a bankruptcy will influence your financial future, make sure you get the correct advice before you proceed.
Bankruptcy is a legal solution that helps individuals stop collections efforts including garnishment of wages, harassing phone calls, collections letters, home foreclosures and creditor lawsuits – it controls the actions that creditors can take against you and your assets. Furthermore though a bankruptcy an individual can often reduce or eliminate their debt and provides them with a fresh financial start.
Although there are four types of bankruptcies, below are the two most commonly used by individuals trying to obtain financial relief. Each bankruptcy is named after their respective chapter in the United States Bankruptcy Code.
Is designed for people who are having difficulty paying their existing debts. It is what most people refer to when they say, "I'm filing for bankruptcy." It is best suited to those cases in which the majority of debt is unsecured. Debtors can protect certain assets up to a predetermined amount. Although individuals, corporations and partnerships are all eligible for Chapter 7 bankruptcies, businesses generally try to avoid this type of bankruptcy because you cannot operation your business during the length of the bankruptcy.
Is a total reorganization of an individual’ debts who has a regular income. This tool is designed for individuals who are behind on their secured debts, such as their home mortgages or car loan, so they can resume regular monthly payments and the reorganized debt over time. One important thing to note is that depending on the income of the individual, some portion of the debt may be discharged during the bankruptcy proceeding. Chapter 13 is completed under the supervision of the courts and gives the individual a maximum of 5 years to repay the reorganized debt.
While bankruptcy can help stabilize your finances, decrease your debt, and give you time to focus on your finances, it is important to remember that it will have a significant impact on your credit score – a bankruptcy will be noted on your credit report for seven (7) to tem (10) years.
Entering into a bankruptcy, and which type of bankruptcy, will influence your financial future. Each option should be carefully evaluated before you proceed. Please make an appointment today to consult with our attorney’s what options best serves you and yours and advice what your available next steps are.