When individuals or couples find themselves unable to pay their debts due to job loss, medical issues, unexpected expenses, or other reasons, they should consider whether bankruptcy is a viable option to help solve their debt issues.
Chapter 7 bankruptcy allows debtors to eliminate most unsecured debt, which can be a great relief when debts become overwhelming. The bankruptcy will also stop most lawsuits, collection efforts, wage garnishments, and repossessions. The downside for some is that bankruptcy usually lowers the credit score. However, in some cases, if the score is already low, the bankruptcy may not have a large impact on the score.
Before filing a bankruptcy case, potential debtors must evaluate certain aspects of their financial situation. Debtors must determine whether any of their assets could be taken by the bankruptcy trustee for purposes of liquidation, and then payment to creditors. A bankruptcy attorney will be able to tell whether all the debtor’s assets will be protected (exempt) in the bankruptcy case. If the assets can be protected, the trustee will not be able to take them, and they will remain in possession of the debtor(s) during and after the bankruptcy case.
Debtors must also consider whether the debts they have will be discharged in a bankruptcy. Some debts are not dischargeable. Examples include certain tax debt, most secured debt on property that the debtor intends to keep, debts created through fraud, and debts to a spouse or a child pursuant to a divorce decree. There are other examples as well, and it is important to talk to an attorney before filing to make sure that the debts you want to discharge can be eliminated through bankruptcy.
Possibly the most important issue is whether the debtor qualifies for bankruptcy. The basic qualifications are determined by income earned in recent months. However, there are different chapters of bankruptcy, and it is important to know which chapter fits your situation and which one you qualify for, if any. Again, consulting with an attorney is important to decide whether bankruptcy is the best solution for you.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.