When can you file for bankruptcy? Find out here
When can you file for bankruptcy and what does the process entail? Bankruptcy is a term many people do not want to hear and for obvious reasons. There is a downside of declaring that you are completely broken not to mention that your credit score will be affected negatively.
The media has also played a large part in fueling the scare of bankruptcy. You cannot stay for long before you hear of one celebrity who has filed for bankruptcy. There comes a time when you cannot avoid declaring that you are no longer able to foot your debts. When can you file bankruptcy? Our lawyers will advise you appropriately if you live in Utah.
When should you file for bankruptcy?
Certain cues will tell you when it is time to file for bankruptcy. It is not a shameful step to take. On the contrary, it is one of the boldest decision that one can make. The beauty with filing for bankruptcy is that you avoid the pressure from the lenders and can pay your debts in peace. The move also allows you to start afresh and you can build your credit score.
Are you a ripe candidate for bankruptcy? Here is the checklist:
- Do you make minimal payments on credit cards?
- Are lenders on your neck all the time?
- Do you pay for basics using your credit cards?
- Have you been considering consolidating your debts?
- Have you lost count of what you owe?
- Do you feel out of control, anytime you think of your financial standing?
Assessing your financial situation
When can you file for bankruptcy? The first thing you must do before you trend on this path is to assess your financial situation. Do you really need to declare bankruptcy? If your answer to most of the aforementioned questions was yes, then you need to give this option more thought. To make this assessment easier for you, if you have debts that you cannot afford to pay, consider filing for bankruptcy.
To get a more informed financial record, list all the liquid assets that you have. In the inventory, include also stocks, retirement funds, bonds, vehicles, college savings, accounts and real estate. Include other funds that are not related to the banks. Figure out the estimates for each item and then get the total.
Take another inventory of your credit and bill statements. It is best to make this list run parallel to the one for your assets. If you find that the credit side is more than the asset side, filing for bankruptcy may be your only way out of the bad financial situation.
Determine the odds
It is important that you establish beforehand what will happen after you decide when to file bankruptcy. Actually, there are two bankruptcy options to choose from when you decide to file for bankruptcy. Each of the plans has its unique outcomes. Understanding what each of the types of bankruptcy entails will help you to make an informed choice, depending on your case.
When to file for bankruptcy under Chapter 7
Chapter 7 bankruptcy is commonly used by many people who want to be done with their debts for the last time. Whatever your reason for taking this move is, you will find this plan very instrumental.
It involves the liquidation of all assets that you may have, after which the money is used to pay off most of your debts. The cash is divided among the lenders by the chapter 7 trustee. It takes the shortest time possible, precisely four months to complete. However, the scar remains on your credit report for about ten years.
You should not hesitate to file for this kind of bankruptcy because you are allowed more time to try to rectify your credit record. If you have some assets that you feel you do not wish to part with, Chapter 7 bankruptcy is not suitable for you.
When to file for bankruptcy under Chapter 13
The other available option for you is filing for Chapter 13 bankruptcy. It is the best choice if you have assets that you would love to retain. For people with a steady income, this plan helps to prolong the payment period for their debt, and that is why it is referred to as a chance for debt reorganization. Mostly, you will be given three to five years to repay all that you owe.
The good thing with this option is that your lenders no longer communicate with you but with the trustee who is appointed by the court to disburse payments every month. Whatever payment is set for you to pay is given to the trustee who then ensures it gets to each of the creditors. The unsecured loans are also eliminated, giving you peace of mind.
With that information, you now know when to file for bankruptcy. You need not to be ashamed of declaring bankruptcy and if you live in Utah, you can come to us for a bankruptcy lawyer to undertake the process for you.
My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.
To schedule an appointment, call (435) 901-3449
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