Knowing the best time to file bankruptcy isn’t exactly easy to determine, but is more often than not the best and only option people have for a fresh start. Bankruptcy is a way for people and businesses to petition the courts to discharge their debts so they are no longer legally obligated to pay them. Both people and business can file for bankruptcy, usually because they have far more debt owed then they have funds to pay them. If you are considering filing for bankruptcy, you are not alone. In 2018 more than 750,000 people and business filed for bankruptcy. This includes people just like you, celebrates, and big corporations alike, so there is no shame and needing a fresh start.
When you find yourself asking “should I file for bankruptcy?”, please know that there isn’t really what you could consider a perfect time to do it, but if you think it will take more than 3-5 years to pay your debts then you may want to seriously consider it. The idea with bankruptcy is to give people a second chance, it isn’t exactly without penalty of course. The bankruptcy will remain on your credit report for 7-10 years depending on which you filed. It can also affect your ability to open new lines of credit, apply for loans, and can even cause you problems when applying for certain jobs.
The two most common types of bankruptcies are Chapter 7 and Chapter 13. There is also Chapter 9 which only applies to cities and towns, Chapter 11 for business, Chapter 12 known as the “family farm, family fisherman” bankruptcy, and Chapter 15 for people with debts in more than one country to name a few.
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Chapter 7 is the most common for individuals, which if approved release you from having to repay any debts. The bankruptcy trustee looks at a person’s income, debt, and property and puts it into two categories Exempt and Non-Exempt property. Exempt property generally will include items like your home, your primary vehicle, anything necessary for your work. Non-Exempt property will include but isn’t limited to cash, bank accounts, collectable items, second vehicle or home. Non-Exempt property will be used to pay back the debts.
Chapter 13 is a reorganization of your debts for repayment to your creditors over the next 3-5 years. Chapter 13 bankruptcy is for people who make too much to qualify for Chapter 7. It takes a little more work to qualify for Chapter 13 and most people do not successfully finish their plans and more often than not have to revert to Chapter 7 or creditors will be free to resume collections.
Life happens and things get in the way but that doesn’t mean there is nothing you can do. If you are thinking about filing for Chapter 7 or Chapter 13 bankruptcy do some research and call a chapter 13 bankruptcy lawyer in Arlington, TX for assistance.
Thanks to Brandy Austin Law Firm, PLLC for their insight into bankruptcy law and when to file.
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