When Is A Good Time To File For Personal Bankruptcy
As your debts continue to pile up, and you are getting calls from more and more creditors, you may be considering making the decision whether or not you should file for personal bankruptcy. Understanding the basics of whether you are eligible to file for bankruptcy, and when you should do so, can help you make the best decision for your financial future. Bankruptcy can provide a financial clean slate in many cases, and oftentimes can be the tool by which a person can reset and restart their life. The following is a brief overview of what types of bankruptcies are available, whether or not you may be eligible for bankruptcy, and when you may be able to file.
Determining When To File For Bankruptcy
You may be in a position for personal bankruptcy if you find yourself in any of these situations:
- Your home is in danger of being foreclosed upon, and you are in danger of being homeless.
- You are recycling your debt and using loans to pay other bills, or using one credit card to pay another.
- You are receiving calls from debt collectors nonstop and it is interfering with your life and your emotional health.
Most people have debts, however, if you can not seem to find a way to resolve your debts with any kind of a payment plan, or there seems to be no exit strategy for your financial situation, you may benefit from filing either a Chapter 7 or Chapter 13 bankruptcy.
Even if you have made the decision that you are considering bankruptcy, not every person is always able to file for bankruptcy. First, it is important to note that there are two types of bankruptcies available for individuals: Chapter 7 and Chapter 13. Each of these bankruptcies operates differently and have a different set of eligibility criteria.
A Chapter 7 bankruptcy will allow individuals to eliminate much, if not all, of their consumer debt, and involves a person passing what is called a “means test.” This means test will carefully examine all debts and income of a person and then calculate whether or not they are eligible to declare a chapter 7 bankruptcy in their specific financial condition. This calculation can be complicated, and visiting with an experienced bankruptcy attorney can help you determine if you are eligible to declare Chapter 7 bankruptcy.
A Chapter 13 bankruptcy will not discharge all debts, but instead, allow a person to reorganize their debt and develop a repayment plan for their creditors. Chapter 13 bankruptcy does not require a person to pass a means test, however, there are certain thresholds regarding types of secured and unsecured debts that must be met in order to be eligible for a Chapter 13 bankruptcy. Also, all federal and state taxes must have been filed by the person for the prior 4 years in order to qualify for a Chapter 13 bankruptcy.
Let Us Help You Today
If you are unsure if bankruptcy is right for you, or if you are eligible to file for bankruptcy, contact our experienced West Palm Beach bankruptcy attorneys today at Kelley, Fulton & Kaplan at 561-264-6850 for a free consultation.