When your financial obligations become far more extensive than you can reasonably handle, you go through all of the possible scenarios to deal with your situation.
You try to take a second job, rework your budget, cut costs, and do everything else possible to try to make your minimum payments and avoid those nagging collections calls that keep coming your way. However, in spite of all this, you have not made the progress on your debts that you would like and have decided to throw in the towel and file for bankruptcy.
Once you have reached this decision, all you need to do is decide which chapter of bankruptcy you should file. So, get to know your options so you can contact your bankruptcy attorney and get the process started.
Chapter 7 bankruptcy is among the most common options available to you. This is also the simplest type of bankruptcy that you can file.
Essentially, you and your bankruptcy attorney will compile a comprehensive list of your current liquid assets and all of your debts to present to the courts. These liquid assets include any money, investments, and certain property you may own that can be used or sold to pay off your debts.
If your assets are insufficient to pay of your debts or you do not have any such assets, your debts go unpaid but are written off in the bankruptcy process. There are income requirements that limit who is eligible to file for chapter 7 bankruptcy. Thus, if you make too much money, you will not be allowed to file chapter 7 and may be required, instead, to file a different type of bankruptcy.
Chapter 13 bankruptcy is an option available to you if you make too much money annually to qualify for chapter 7 or if you prefer to attempt to pay off your existing debts over time. In this type of bankruptcy, you and your bankruptcy attorney will once again compile a comprehensive list of your debts. However, you do not have to sell off any of your property to pay off your debts.
While you get to keep your assets, you will be required to conform to a repayment plan that will last between 3 and 5 years to pay off your debts either fully or partially. You must be able to make monthly payments towards your debts in order to be eligible for chapter 13 bankruptcy.
Knowing which type of bankruptcy you intend to file will help you better understand what is in store for you. Whether you will be liquidating your assets to pay off your debts or setting up a debt repayment plan, you can prepare yourself for the bankruptcy process and finally have a plan to get rid of your debts once and for all.