Setbacks are common in life. If your financial situation has spiraled out of control it’s wise that you file for bankruptcy.
Paths of Relief
Bankruptcy laws provide you with two paths for relief: chapter 7 and chapter 13.
Chapter 7 is aimed at helping you to cover the debts resulting from personal loans, credit cards, payday loans and medical bills. This chapter is most ideal for people who own less property. This is because your assets are sold, or liquidated in order to pay creditors as much as possible. If there are any debts that remain after the sale of your assets, they are wiped away leaving you with a clean slate.
For you to qualify for chapter 7 your monthly income must be less than the average income in your state. If you earn more than the average income, you have to pass a stringent means test in order to qualify to file chapter 7.
Chapter 13 on the other hand doesn’t erase debts. Here your debts are reorganized into a repayment plan. It’s good to note that while filing chapter 13 bankruptcy your average monthly income is considered. If you earn less than the average income, you have to repay the debts in no more than 36 months.
If you earn an average or above average income you have to make the repayments in 60 months.
You have the option of using either federal list or state’s list of exemptions. It’s good to note that while you can mix and match the exemptions, you have to stick to one. To make the right choice you need to find an attorney who will help you out. In addition to helping you to make the right choice of exemptions, the bankruptcy lawyer will also help you in filing your bankruptcy petition.
Depending on the number of creditors that you have, bankruptcy forms can be as long as 60 pages which can be too complex for you. Filing for bankruptcy stops any collection activity by your creditors.
The bankruptcy lawyer will also help you in discussing any issues that might come up during the 341 meeting with your creditors. This helps you to be fully prepared and puts you at a better position of answering any questions that the trustees may ask.
This is what you need to know about bankruptcy law. To increase the chances of winning the case ensure that you hire the best lawyer in your area.