Many people across the country find themselves experiencing financial hardship or situations where they are in over their head and unsure how to recover financially. While the decision to file for bankruptcy can be challenging to reach, it may be the best solution for those facing consuming debts. There are many reasons that a person may need to file for bankruptcy. The decision to file for bankruptcy is a significant one and not something that should be taken lightly, which is why it will be critical to take the appropriate steps when determining whether bankruptcy is right for you. There will be many decisions to make should bankruptcy be in your best interest, including whether to file for Chapter 7 or Chapter 13. Working with an experienced bankruptcy lawyer may be one of the most crucial steps to take to ensure that your needs and wishes are kept at the forefront of the process.
Reasons People File
There is a vast range of reasons people may need to file for bankruptcy, and it may come as a surprise that, in many cases, this is due to financial hardship, not reckless spending. While there may be alternative options available for people who are experiencing financial difficulties, in some cases, filing for bankruptcy may be the most appropriate option. Common reasons people file for bankruptcy include:
-Job loss
-Illness
-Costly medical expenses
-Unexpected expenses
-Divorce
-Making poor financial decisions
Many families across the country do not have savings to cover in the event of unexpected expenses. This can result in devastating consequences, including the inability to keep up with mortgage payments, car payments, credit cards, and more. While in some situations, bankruptcy may be necessary because a person overspent or lived beyond their means, in many cases, bankruptcy resulted from unexpected or unplanned expenses.
Steps to Take if You Are Considering Bankruptcy
For many who are in financial crisis, unable to pay their debts, or facing a significant life change that impacts their income, bankruptcy may be the most appropriate option. However, it’s essential to keep in mind that bankruptcy is a big decision that can have a long-term impact. Because of this, those considering bankruptcy must take the following steps to ensure that bankruptcy is the most appropriate option for them:
- Attend credit counseling. This will be critical for a few different reasons when considering bankruptcy. Not only is credit counseling required before a Chapter 7 bankruptcy filing, but it may also be able to provide you with alternative solutions.
- Find a lawyer with experience in representing bankruptcy cases. While it may be possible to represent yourself when filing for bankruptcy, it may not be in your best interest. A lawyer will know the ins and outs of the bankruptcy process, listen to your needs, and make recommendations regarding how best to move forward. Depending on your assets, earnings, and what you are hoping to keep, one type of bankruptcy filing may be better than the other.
- Determine whether to file Chapter 7 or Chapter 13. These forms of bankruptcy are among the most popular; however, they involve two different paths. Chapter 7 is considered a liquidation bankruptcy, allowing debtors to wipe the slate clean. To qualify for this, you must make below the median income for your state. It’s essential to be aware that many assets will be sold to settle your debts. Chapter 13 is called the wage earner’s plan. Debtors work to develop a repayment plan over 3-5 years to pay back many of their debts, and it is a viable option for those who don’t qualify for Chapter 7. Additionally, Chapter 13 provides the best opportunity for debtors to retain some of their assets, such as their home.
Determining that bankruptcy is the right step forward is not always an easy decision to make and should not be taken lightly. For debtors experiencing financial challenges, it will be essential to consider all options before filing for bankruptcy. Working with an experienced lawyer, like a Chapter 7 bankruptcy lawyer, may be the most appropriate way to protect your interests and make the right decisions moving forward.
