For many, the decision to declare bankruptcy is not something that is made lightly. Most who file do so because it is their only remaining option. If you’re considering this option but remain unsure whether or not filing for bankruptcy is a good idea for your circumstances, the following blog can help. As you read, you’ll discover the different types of bankruptcy you can pursue, as well as indicators that this is the right time to proceed. In addition, you’ll discover why connecting with a Shelby County, TN bankruptcy lawyer is in your best interest during this difficult matter.
What Is Bankruptcy?
Bankruptcy is a legal process in which a filer who is unable to repay debts in their name can receive relief. This allows the filer to regain control of their finances and start fresh. The entire bankruptcy process is a federal matter, and your case will be handled by a trustee appointed by the courts, who adheres to the U.S. Bankruptcy Code.
For most consumers who file, there are generally two options. The first is Chapter 7 bankruptcy, which involves the liquidation of assets to repay outstanding debts. However, before you can file, you must meet the eligibility requirements for this process, which entail passing a means test. Essentially, this compares your household income to that of other households of similar sizes across the state. If you earn less than the average income, you’ll be eligible to file. Once you begin Chapter 7, the trustee assigned to your case will begin seizing your non-exempt assets. Once all assets have been sold and creditors have been repaid, the remainder of your eligible debt will be forgiven.
The other option is Chapter 13, which is a repayment plan. Essentially, the court will reorganize your debts into one lump sum, which you will then pay off in installments that last for three to five years. At the end of your case, all eligible debts will be forgiven. Though this process is generally longer and more expensive than Chapter 7, it can offer greater protection for assets.
When Is Filing a Good Idea?
Generally, bankruptcy is a last resort option for individuals with a considerable amount of debt. Typically, attempting to manage debt through settlements and consolidation is a more common option, as it can avoid the consequences of bankruptcy. However, there are certain circumstances in which filing is in a debtor’s best interest.
If your debts make it impossible to meet your basic living expenses, like groceries, utilities, and rent, filing can be a viable option. In addition, if debt collectors have initiated lawsuits against you for the funds they are owed, it may be in your best interest to file, as you will be granted an automatic stay to halt these actions.
Making the decision to file for bankruptcy is not easy. That is why it’s in your best interest to connect with an experienced attorney with the Arnold Law Firm to discuss your legal options. Our team understands how overwhelming it can be to try and determine if bankruptcy is right for you, which is why we are here to assist you. Contact us today to learn more.
