Are you struggling to pay your bills? Are your debts becoming a stress that you deal with more and more with no end in sight? Although it has carried quite a stigma in the past, filing bankruptcy may be able to help you with a financial fresh start. Unforeseen circumstances like a job loss or lengthy injury or illness can lead down a difficult and steep financial path. Fortunately, there are ways to get back on your feet and head back up the trail.
The first question is which chapter of bankruptcy is right for your specific situation, Chapter 7 or Chapter 13? Here are three things to consider when answering that question:
1. What debts are causing stress?
Deciding to file bankruptcy should start with figuring out which debts are causing you the most stress. Chapter 7 bankruptcy is best for individuals whose main debt is a result of credit cards, medical bills, payday loans, and/or other unsecured debts. In the alternative, Chapter 13 bankruptcy can help with secured debts like a home mortgage in foreclosure or a vehicle loan. Otherwise, if your debts do not fall in either of those categories, a bankruptcy will not likely help you: back taxes, student loans, etc.
2. Do you earn enough to pay your monthly bills?
Income has a lot to do with which type of bankruptcy is right for you. Start by asking yourself how much money you have leftover at the end of the month once you have paid necessary bills like rent, utilities, groceries, etc. If the figure you end up with is a negative number or very close to $0 then you will most likely qualify for a Chapter 7 bankruptcy. If the figure you end up with is $500 or more then the bankruptcy court may conclude that you have enough to pay back some of your debts in a Chapter 13 bankruptcy repayment plan.
3. Are creditors harassing you and/or garnishing your wages?
A good indicator that you may need to consider the option of filing bankruptcy is when creditors begin calling you non-stop, sending you threatening letters, or take you to court in order garnishment your wages. If this is happening to you, filing bankruptcy can immediately stop the debt collection process.
Filing a Chapter 7 or Chapter 13 bankruptcy provides protection from creditors, even stopping garnishments already being collected from you.
If you have been dealing with debt that you just don’t think you can pay back, consider filing a bankruptcy. Don’t let another day go by without asking a bankruptcy attorney for help. Let bankruptcy help you start over by becoming debt-free!