Accumulating debt is a fairly easy thing to do throughout a lifetime. Student loans, car loans, credit card payments, medical bills, etc., are significant contributing factors to many personal debts. In many cases, one’s job doesn’t pay enough to support themselves and their debts, leaving one in a precarious financial situation. If you find that your debt far exceeds your ability to pay it off in a comfortable manner and still have money for your daily needs, filing for bankruptcy may be a necessary step for you.
The Types of Bankruptcy
The most common forms of bankruptcy for individuals are chapter 7 and chapter 13. When filing for Chapter 7 bankruptcy, your non-exempt assets will be liquidated to pay off creditors. Chapter 7 is typically the best option for those who have a significant amount of unsecured debt–credit card bills, medical bills, etc.–with little income to support themselves and their debt. On the other hand, chapter 13 bankruptcy will adjust your debts by using a repayment plan. Chapter 13 is a good option for those who have a decent income but need time to catch up on their debts and personal finances. Once you have determined which form of bankruptcy fits your personal needs, your creditors will be placed on notice. This means that most debt collection calls with ceasing, and they will no longer have the ability to send collection letters, seize assets, file lawsuits, garnish your wages, etc.
When To File
While filing for bankruptcy can have some drawbacks when it comes to your credit, there are many circumstances when filing is the best option for your financial health and future. Here’s when it’s an ideal time to file for bankruptcy:
- Your liabilities are more extensive than your assets: The most common reason many individuals file for bankruptcy is when they don’t have the ability to pay off their debts while funding their day to day necessities. When their debts far exceed their monthly income, it’s best to file.
- You’ve already tried to negotiate a repayment plan: Filing for bankruptcy may be your next best option if you have previously contacted creditors to work out a repayment plan with no success. Many creditors may be unwilling to an extended plan, requiring you to pay it in full. If negotiating hasn’t worked for you, consider the bankruptcy options you have.
- You’re out of work: With a fluctuating economy, layoffs are far too common throughout the workforce. If you’ve been out of work for an extended period of time and have little no income or savings to pay your debts, bankruptcy could be your next step towards financial stability.
In addition to these examples, it may also be best to inquire about your bankruptcy options if you have delinquent taxes, garnished wages, pending lawsuits, or are nearing foreclosure. If you find that any of these situations pertain to your own, it’s wise to seek professional help to evaluate your financial options carefully.
Loan Lawyers wrote this post. Loan Lawyers is a team of experienced and aggressive consumer rights litigation and trial attorneys in South Florida helping clients throughout Florida.