Bankruptcy is a frightening and overwhelming concept. This process involves doing things that will wipe away some debts, restructure others, and damage your credit report for years to come. However, there are times when bankruptcy (and the fresh start it offers) are necessary. In this guide, you will learn how to declare bankruptcy.
Determine Whether You’re Eligible
The first step is to determine whether you are eligible for bankruptcy. A person who is bankrupt owes more than he or she can pay, and not everyone has sufficient debt to warrant a filing. To assess your financial situation, inventory your assets. Things like retirement accounts, savings accounts, bonds, stocks and other assets deserve special attention. Add up your bills and other debts, and if your assets’ value is less than what you owe, you may be eligible for bankruptcy. A bankruptcy lawyer in Cornelius, NC can give you case-specific advice.
How to Declare Bankruptcy
There are two ways to declare individual bankruptcy; you can file voluntarily with the help of Lake Law Office, PLLC, or you can wait for creditors to file a petition. In most cases, the first choice is the most favorable one. There are several bankruptcy types, and each has its benefits and drawbacks. A bankruptcy lawyer in Cornelius, NC can help you decide which bankruptcy type best fits your situation.
Chapter 7
This is like a “reset” button. It liquidates your assets to pay your debts, and at the end, you’re left with no debt; but hardly any possessions either. Most bankruptcies are discharged within four months, but the filing will stay on your credit history for ten years. For many filers, Chapter 7 is the fastest way to a clean financial slate.
Chapter 13
For those who don’t want to lose all their assets, Chapter 13 may be a better choice. While it wipes away fewer debts, Chapter 13 lets filers reorganize debt into a more manageable form. Debtors can have up to five years to repay debts, and for those with stable incomes, Chapter 13 may be the best option.
There are some disadvantages to a bankruptcy filing, but sometimes there’s no other option. In many cases, bankruptcy can give you the fresh start you need, and it can help you change your finances for the better.
