If it is time to acknowledge overwhelming debt, then it may also be time to start over. Although bankruptcy is a term that often elicits feelings of desperation and failure, the institution is set up to give people the best chance at future financial health.
When is it time to think about chapter 7 bankruptcy?
Chapter 7 is a good choice for individuals struggling with debt that cannot be controlled, often accompanied by creditor harassment and poor credit scores. Chapter 11 bankruptcy, often called reorganization, involves people or businesses who cannot afford to lose the assets required to settle debts. Chapters 12 and 13 generally involve sole proprietorships or smaller businesses.
Who can qualify for chapter 7 bankruptcy?
People with personal assets that can help settle extreme debts in business or consumer expenses may apply. However, people with more consumer debts may find a bankruptcy case rejected by the court if it finds relief to be an abuse of the chapter.
What are the requirements to gain chapter 7 bankruptcy?
A repayment plan, often required under chapters 11 and 13, is not required because most disposable assets and income will be managed directly by a trustee appointed by bankruptcy court. A person cannot apply for bankruptcy if they have done so within the last six months.
Who can help with a bankruptcy filing?
An attorney may increase the chances of the success of an initial filing, which may bring the end of constant calls from creditors and processes of default. Legal representation can help people work out their finances enough to start over.