How to I decide whether bankruptcy is necessary?
Before deciding to file for bankruptcy, you must understand what bankruptcy will and will not do for you. Bankruptcy won’t solve every problem or get rid of every debt. If it is clear that you need bankruptcy relief, the next step is to determine what type of bankruptcy to file.
TYPES OF DEBTS
Whether bankruptcy is the right choice, and if so, what type of bankruptcy to file, depends in large part on the type of debts you have. There are three main types of debts: secured, unsecured, and priority. Unsecured debts include things like medical bills and credit cards. Secured debts include car loans, mortgage loans, and some store accounts. Priority debts include most income tax obligations.
CHAPTER 7 BANKRUPTCY
A Chapter 7 bankruptcy will discharge most unsecured debts. Secured debts, such as a car loan, or home mortgage, normally must be paid in order to protect the collateral. Priority debts, such as most income tax obligations, usually cannot be discharged in a Chapter 7 bankruptcy.
So, if most of your debt is general unsecured debt like credit cards and medical bills, and the payments on your secured debts are up to date, Chapter 7 bankruptcy may be a good choice. If you owe significant tax debt or the payments on your secured debts like your car loan or home mortgage are significantly past due, Chapter 13 may be the best option.
CHAPTER 13 BANKRUPTCY
Under Chapter 13, a repayment plan is set up for a period of 36 to 60 months. To file Chapter 13 you must have regular income sufficient to pay your living expenses and still fund the plan. Your attorney will review your income and expenses, and work to formulate a plan you can afford. A typical Chapter 13 plan pays secured debts and priority debts over the term of the plan. Unsecured debts are often paid little or nothing, but you are protected while the plan is going on, and balance that remains when the plan is completed is normally discharged (wiped out).
GOOD ADVICE IS MOST IMPORTANT!
It is critical that you get good legal advice before making any decision about bankruptcy. Make sure you talk to an attorney with experience in both Chapter 7 and Chapter 13 cases. Most good bankruptcy attorneys will provide you with a free initial consultation. He or she will fully evaluate your finances and explain all of your options.
Other Frequently Asked Questions:
- Are alimony debt and payments dischargeable in bankruptcy?
- Are my student loans dischargeable in bankruptcy?
- Are tax liens dischargeable in bankruptcy?
- Can a Chapter 7 bankruptcy save my home from foreclosure?
- Can bankruptcy help my credit score?
- Can bankruptcy help with my income tax obligation?
- Can bankruptcy protect my workers compensation settlement funds?
- Can I discharge my old tax debt in bankruptcy?
- Can I file for social security disability while I’m still working?
- Can I receive workers compensation benefits if I was injured before or after clocking out?
- Can my re-enlistment bonus be discharged in bankruptcy?
- Can the bankruptcy trustee in my case seize the funds in my bank account?
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- Chapter 7 Basics
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- How can I stop debt collectors from harassing me and my family?
- How do I decide if bankruptcy is necessary?
- How do I know if bankruptcy is the right choice for me?
- How does the foreclosure process work in Georgia?
- How long does a bankruptcy case take?
- How long must I live in this area before I can file bankruptcy here?
- I cosigned a debt for a friend and now he won't pay. What can I do?
- I was fired after being hurt on the job. Can I still file for workers compensation?
- I was injured at work. Can I sue my employer?
- I was terminated from my job after a work injury. Now my condition has worsened. What are my options?
- I’m considering filing a Chapter 13 bankruptcy. Do I have to include all my debts?
- I’m starting to think I may have to file for bankruptcy. Where do I start?
- If I file bankruptcy, can I keep my cars and motorcycles?
- Is child support arrears dischargeable in bankruptcy?
- Mortgage and debt relief for active military personnel
- My car has been repossessed. Can bankruptcy help me get it back?
- My Chapter 13 case was dismissed. Can I file a new case and protect my property?
- My doctor released me to light duty, but my employer is insisting I do more strenuous work. What should I do?
- My ex assumed our joint debts as part of our divorce settlement. Now he's filed bankruptcy. What can I do?
- My house is being foreclosed – What can I do?
- My workers comp doctor has released me to light duty work. Can my employer cut off my weekly benefits?
- My workers compensation doctor says I can return to work, but I can’t do the job. What can I do?
- Ripped off by a debt settlement company?
- Social security benefits — Can a creditor garnish my bank account and seize my social security funds?
- The trustee has filed a motion to dismiss my Chapter 13 case. What are my options?
- What can I do to improve my credit score?
- What should I do if a creditor demands payment after I’ve filed my case?
- What to expect: First credit counseling course
- What to expect: free bankruptcy consultation
- What to expect: Second credit counseling course
- What to expect: Your next appointment
- When is my bankruptcy case closed by the court? Is it possible to reopen the case?
- Where would my bankruptcy case be filed, and where would the hearings be held?
- Will I have to sell my primary home, rental property or vacation home if I file for bankruptcy?
- Will paying off an old debt raise my credit score?
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Morgan & Morgan attorneys can help settle your debts such as credit card debt, auto loans and mortgage debt. Contact us if you need assistance with baknruptcy or have any questions about the process. No problem is too big or too small for us to help.