Bankruptcy is a scary word, but if you are facing financial distress, it can actually be your best friend. In this blog entry and the next, we’re going to highlight key questions to consider regarding bankruptcy. Please give us a call if you’d like to discuss this further.
Which form of bankruptcy makes the most sense for me? You’ll need to decide between Chapter 7 and Chapter 13. A major factor is whether or not you’re behind on house payments, but want to keep your house. A Chapter 13 bankruptcy can include a repayment plan, whereas it’s not usually possible to bring payments up to date with a Chapter 7. Chapter 7 is usually quicker than Chapter 13, and most debts are discharged in a Chapter 7 bankruptcy.
Are there qualifications? You have to qualify for Chapter 7. If it looks as if you have enough income to repay your debts, you won’t be able to file a Chapter 7 bankruptcy, though you may be able to file if your income is high but your expenses are also high. Generally, to be eligible to file for a Chapter 7, your monthly income needs to be less than the median income for a household of your size in the state you live in.
Do I have to give up everything? You can keep many assets. Theoretically, you surrender your assets in a bankruptcy to pay your debts, but only a few assets are usually affected in practice. It’s often possible to keep your house and car.
With a Chapter 7 bankruptcy, the bankruptcy trustee can sell off your assets, but only if they aren’t exempt. For details relating to exemptions to can contact our office and speak to one of our attorneys..
With a Chapter 13 bankruptcy, you’re allowed to keep your property. You’re expected to pay back your debts, but exactly how much you have to repay creditors can depend on how much you can exempt, so exemptions can also be useful in a Chapter 13 bankruptcy.
Will it be on my credit history? You can expect a bankruptcy to appear on your credit history. A bankruptcy will stay on your credit report for about 10 years. The more accounts included in a bankruptcy, the larger the impact on the credit score.
Bankruptcy can offer relief for individuals and families facing financial distress and impossible debt burdens. If you’d like to discuss your situation further, please contact us today.
Law Office of Ray Garcia, P.A.
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