WHEN IS THE RIGHT TIME
TO FILE FOR BANKRUPTCY?
If you are exploring options for financial relief, you may have considered filing for bankruptcy. According to the American Bankruptcy Institute, an estimated 39 million Americans have filed for bankruptcy at one time or another. Within this tool for debt relief, there are a few different routes you can take. Having an experienced bankruptcy attorney by your side can help.
At The Winter Law Group, we are a resource for you. Our principal attorney has over a decade of experience in bankruptcy and stands as an understanding and knowledgeable guide through the process. We serve clients in Fresno, California as well as the neighboring areas of Clovis, Visalia, Madera, Madera County, Merced, and Merced County.
Assess Your Current Financial Situation
The first step in deciding whether or not bankruptcy is a viable option for you is to assess your current financial situation. How much money do you have coming into your household? How much debt do you owe? Has the situation reached a point where you have collectors calling? If the status of your finances is causing you to lose sleep, bankruptcy may be a good option for you.
Understanding Your Bankruptcy Options
Within consumer bankruptcy, there are two main options — Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy allows you to erase a number of debts that you have accumulated over time. Credit card debt and medical debt are some common examples of what you can wipe away. This type of bankruptcy (also known as “liquidation bankruptcy”) lets you sell off assets to pay off your debt. The assets that you are liquidating are non-exempt assets. This includes things such as your second home and second car. Your furnishings and place of residence are exempt assets and will be safe from liquidation.
In order to file for Chapter 7 bankruptcy, you need to be eligible. Eligibility is based on income. Your income must be higher than the average income for a family of your size in your state. This is to ensure you have enough to pay your creditors. You can also become ineligible if you have filed another bankruptcy charge, had one dismissed in court recently, or defrauded any of your creditors.
Chapter 13
Chapter 13 bankruptcy is ideal for people who have significant income or valuable property that they want to protect. In chapter 13 bankruptcy, you receive debt relief in exchange for paying your discretionary income to your creditors as part of a 3-5 year repayment plan.
Chapter 13 bankruptcy also has eligibility requirements. Your debts — both secured and unsecured — cannot be too large. Secured debt gives the creditor the right to take something like your house away, while unsecured debt is debt like credit card balances or medical bills. Your income must be regular and substantial enough to qualify, and you must be filing as an individual and not a business.
Some Debt Can’t Be Discharged
While bankruptcy is a good option for debt relief, there are some debts that will not be forgiven and the state can even garnish your wages to pay these debts back in some cases. This is the case for child support, alimony, taxes, and student loans.
Which Assets are Affected?
When figuring out how to pay back your debt, your assets may be affected. The type of bankruptcy that you file determines which assets and how much. Your non-exempt assets (your bank assets and second car or home) could be affected in a Chapter 7 bankruptcy filing. In other cases, your pension may be affected.
Work with an Experienced Bankruptcy Attorney
If you have had financial setbacks and are looking to obtain a clean slate, bankruptcy might be the right choice for you. An experienced bankruptcy attorney can help you move toward a more stable future.
At The Winter Law Group, we are ready to help you figure out the next steps that you need to take to discharge your debt. If you live in Fresno, California, or the neighboring areas including Clovis, Visalia, Madera, Madera County, Merced, and Merced County, call us today for a free consultation.