If you’re dealing with serious debt issues, filing for bankruptcy may be an option. It’s like getting a second chance. But it cannot wipe out all of your debt and it comes with some consequences, so keep reading to learn more about bankruptcy as you weigh your options.
What is Bankruptcy?
Bankruptcy is a legal court proceeding when a person is unable to repay their debt. A judge and court trustee will examine the person’s liabilities and assets and determine to discharge the debts. If they find the person cannot repay their debts, the person will have to declare bankruptcy.
Filing for bankruptcy can stop repossessions and foreclosures, and it can temporarily halt evictions.
There are two main types of bankruptcy people file for:
- Chapter 7 Bankruptcy: this is the most common type of bankruptcy. You must earn less than the median income for family size in your state to qualify for this type of bankruptcy. In Chapter 7 Bankruptcy, the court will sell all of your assets, so you can pay off as much debt as possible.
- Chapter 13 Bankruptcy: Also called a wage earner’s plan. To qualify, you must have a steady income and unsecured debt (less than $394,725) and secured debt (less than $1,184,200).
How do I know If I Should File for Bankruptcy?
While job loss and medical debt are the most common reasons people file for bankruptcy, here are some other situations which could cause you to consider bankruptcy.
- Your wages are being garnished
- You’re getting a divorce
- You are unable to negotiate your debt
- You have no assets or they’re worth less than your debt
- You’re being sued
- You can only afford to pay for things using a credit card
- You use one credit card to pay off another credit card
If you’re facing serious debt, contact OlsenDaines for your free consultation because every situation is unique. As experts in bankruptcy law, we’ll address your financial difficulties and help you determine whether bankruptcy is right for you. We also offer a complimentary credit rebuilding program.