A legal option for helping individuals and corporations deal with excessive debt is bankruptcy. It’s a difficult procedure that is best handled with an attorney’s help. The two most popular bankruptcy chapters for individuals are Chapters 7 and 13, although Chapter 11 is more frequently utilized for organizations.
If your total non-mortgage debt exceeds 40% of your income and your repayment options are uncertain, bankruptcy may make sense.
Although bankruptcy will damage your credit and follow you for years, you may start to improve it in as little as a few months.
What is bankruptcy?
People who are having trouble paying off their obligations may find relief via the legal procedure of bankruptcy. Consumers may be able to discharge a portion of their unsecured debt or enter a repayment plan with better terms depending on the form of bankruptcy they declare.
What are the types of bankruptcy?
The two most common kinds of consumer bankruptcy are Chapter 7 and Chapter 13. Chapter 11 bankruptcy is typically used by businesses.
Chapter 7 bankruptcy
Since the majority of unsecured obligations are discharged, Chapter 7 bankruptcy, which is the quickest and most popular type of bankruptcy, is often known as “liquidation.”
Eligibility: If you are eligible to file Chapter 7, you must pass the means test.
You cannot have filed a bankruptcy petition within the previous 180 days that was rejected because you neglected to appear in court or follow court orders, or because you voluntarily disposed of your own filing because your creditors asked the court to help them get back the property they had filed a lien against.
Chapter 13 bankruptcy
Chapter 13 bankruptcy, sometimes referred to as a “wage earners” bankruptcy, restructures debts into a payment plan spread over three to five years.
Eligibility: A steady source of income is required.
You must have filed for Chapter 7 or Chapter 13 during the previous four or two years.
Is bankruptcy right for you?
Making the choice to file for bankruptcy is never simple, and you must evaluate the advantages and disadvantages of how it will affect your debt and credit in the long run. However, in general, filing for bankruptcy could be your best bet if you don’t think you can pay off your obligations within five years.
Do you need a bankruptcy attorney?
The bankruptcy procedure is drawn-out and challenging. Your application can be dismissed if one form is incomplete, in which case you would have to wait six months before filing again. Find a bankruptcy lawyer to guide you through the procedure and make sure all of your paperwork is filled out correctly.
Before filing for bankruptcy, you must consult an experienced person in this field. Get in touch with Recovery Law Group using this link given below:
How long does bankruptcy stay on your credit report?
The single worst thing you can do to your credit is file for bankruptcy since it will remain on your record for 10 years.
The good news is that your credit can start to improve soon after filing, and the improvement may be particularly noticeable if you were already behind on your payments.