If your financial situation has gotten out of hand and you’re thinking of declaring bankruptcy here are 5 common questions to ask. Bankruptcy can be a long arduous and expensive process so becoming informed might save you some time and money on the front end.
1. Chapter 7 or Chapter 13? If you file bankruptcy, it will either be done under Chapter 7 or Chapter 13. Chapter 7 bankruptcy is designed to be a true discharge of debts but any assets you own are more at risk of being sold to pay your debtors. Chapter 13 bankruptcy is designed to provide more protections to your assets but you will have to enter into a repayment plan with the court. There are pros and cons to both options so you should speak with your attorney about how filing either will affect you in the short and long term.
2. Do I qualify for bankruptcy? To file under Chapter 7, you must qualify using a “means” test. Basically, the court will look at your monthly income to determine if it is more or less than the median income for your household size in your state. If it is less, you will qualify. If it is more, the court will have to do some complicated math to determine if you qualify. Your attorney will be able to determine whether or not you qualify. If you do not, Chapter 13 does not have the same requirements.
3. Are My Debts Dischargeable? Certain debts, like child support and alimony are not dischargeable. Likewise, federal student loans are not dischargeable unless you can prove undue hardship. Your attorney will be able to advise you regarding which debts are dischargeable and which are not.
4. Can I Keep My Assets? One of the biggest fears bankruptcy clients have is the fear of losing assets like their home and car. Thankfully, the situation may not be as bleak as you think. See our article 3 Biggest Bankruptcy Myths Debunked for more information and speak with your attorney about creating a strategy to keep your assets after bankruptcy.
5. Can I Live with the Long-Term Consequences? Bankruptcy stays on your credit report for ten years. It will take time and effort to rebuild your credit. In the meantime, you may find it difficult to get a loan, buy a home or rent an apartment.
If you’re ready to seek advice from a North Carolina Bankruptcy attorney, speak with one today!
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