When Should I File for Bankruptcy?
For many people, bankruptcy offers debt relief and a fresh start to your finances. However, filing for bankruptcy depends on a variety of factors and your individual circumstances.
It is imperative to thoroughly review all of your options before making a decision to file. Prior to filing your case, consider the types of debt you have and the goals you want to accomplish through bankruptcy. Remember, not all debts can be discharged in bankruptcy. Additionally, many creditors are willing to work with debtors to settle their debts.
The following are the two main types of bankruptcy:
- Chapter 7 bankruptcy – Wipes out many of a person’s debts in a three to six month period. However, those eligible may lose some of their personal property.
- Chapter 13 bankruptcy – A person is required to make a repayment plan based off of their income. Must demonstrate repayment of debts in the next three to five years.
First, determine what debts will and won’t be forgiven. Certain types of debts, such as alimony or child support, cannot be wiped out through bankruptcy.
Next, figure out what will happen to your home, as well as other properties and assets, if you file. If you are experiencing issues making your mortgage payments, then perhaps bankruptcy will help forgive that debt. However, filing for Chapter 7 can result in losing your home. On the other hand, if your income is high enough, you may file Chapter 13 and include mortgage payments in your repayment plan.
Both chapters of bankruptcy have specific eligibility requirements. In order to qualify for Chapter 7 bankruptcy, your income needs to be low enough to pass the bankruptcy means test. To qualify for Chapter 13, the amount of your debts cannot exceed specific dollar limits.
If you are interested in filing for bankruptcy in Florida, contact Albaugh Law Firm and schedule a consultation with our St. Augustine bankruptcy lawyer today.