Finding yourself neck-deep in bills and collectors is unpleasant. It creates a strain on even the strongest relationships. How can you get out before going belly-up?
Bankruptcy may provide the relief you need. Discover what it takes to qualify for this court process and your most viable choices for proceeding forward.
What Does Bankruptcy Do?
Going through bankruptcy court is an opportunity to get a fresh financial start. If the court accepts the filing, you will have the opportunity to either liquidate assets to pay a reduced amount to creditors, or you may be placed on a monthly payment plan. Regardless, the end goal of bankruptcy is to get rid of the debt, making it possible to move forward.
Did You Suffer a Change in Circumstance?
The debt you accumulated may have been built up over time, or it may be from an unforeseen event. One of the most common reasons people get into debt is job loss. When regular paychecks stop, even for one or two cycles, it may result in financial disaster. Another thing that can come along and derail your financial picture is a medical event. Bills from medical facilities, providers, and pharmacists may make it impossible to keep your head above water. A change in circumstance may see you drowning in debt.
What Does Chapter 7 Require?
Chapter 7 is one of the common routes through bankruptcy. It requires the liquidation of assets to pay debts. To qualify, your income for the previous six months must be lower than the median household for your state. If that does not work, you may have to pass a means test. It allows the trustee to see if you will have the money to pay a portion of your debt. The parameters for the means test and median household income varies by state.
What Does it Take for Chapter 13 Relief?
Chapter 13 bankruptcy is the other means through which you can go through the process. This is an income-based process that allows the trustee to settle your debts for one monthly payment. The state sets the income requirements and the length of time you will need to pay. Chapter 13 payments last anywhere from three to five years, depending on the amount of your debt and your income.
Regardless of the type of bankruptcy path you qualify for, the judge dismisses any remaining debt after your prescribed payment plan or liquidation. As long as you do what you must to follow the court’s plan, you will find yourself on a new financial path at some point soon. To get started, contact a bankruptcy lawyer such as Marty Martin Bankruptcy Law who can give you the proper advice for your situation.