Though we are gradually coming out of the economic recession, many people continue to struggle with debt. Filing bankruptcy provides a serious option to alleviate the stress of this debt, but you should carefully weigh your options before considering bankruptcy. Contrary to popular belief, filing bankruptcy does not erase all of your debt. Certain debts, referred to as priority obligations, will not be discharged when you file bankruptcy.
What to Consider Before Filing Bankruptcy
Filing different chapters of bankruptcy determine what debts are considered priority obligations. Both bankruptcy chapters have different qualification as well. You should take a step back and weigh your options before filing bankruptcy. Consider these points to see if bankruptcy is the best choice for you. One of our RGG Law bankruptcy lawyers can help you with a free consultation if you decide to file or need a more in-depth look at your situation.
Can Bankruptcy Help You?
Many people think bankruptcy restarts the clock without any repercussions, but that’s not exactly true. When filing bankruptcy, you invite outside parties to scrutinize your spending habits and general life. This is not easy. Depending on your state’s laws and the nature of your debt, you could still have debt after bankruptcy too. If you have the ability to pay off your debt, this might still be the best option. Many creditors work to help you pay off your debts. Talking with them is always a smart first decision before considering bankruptcy.
Will You Qualify for Bankruptcy?
The qualifications for Chapter 13 bankruptcy differ from qualifications for Chapter 7 bankruptcy. Low-income filers often choose Chapter 7. You must pass a “means test” to determine if you are absolutely incapable of repaying your debts without filing bankruptcy. If you have a high disposable average income over the six months prior to taking the means test, then you are less likely to qualify for Chapter 7 bankruptcy.
Chapter 13 bankruptcy relieves less debt than Chapter 7, and you have to show your ability to repay your obligations before you can qualify. You must first subtract the debt from secured car loans and mortgages. A secured debt of more than 1.2 million dollars will disqualify you.
Has Your House Been Foreclosed on?
If a lender has already foreclosed on your house or repossessed your property, then filing bankruptcy wouldn’t necessarily save your property. A court, however, issues an automatic stay which that stops or slows the foreclosure. This might give you enough time to catch up on payments.
RGG Law Knows Bankruptcy Inside and Out
Our RGG Law bankruptcy lawyers know the intricacies of bankruptcy law. If you have any more questions or concerns before filing bankruptcy, call or contact RGG Law. One of our bankruptcy lawyers would be happy to assist you.