When to File for Bankruptcy

(Photo : When to File for Bankruptcy)

A debt that feels unmanageable can give you sleepless nights and leave you unsure about your next move. Filing for bankruptcy is distressing and is usually the last option for people unable to pay their debts. But, despite its many cons, it can help you retrace your steps back to financial stability.

Sometimes the language barrier may pose a challenge when you are Latino and want to file for bankruptcy in Orlando, Florida. Avoid limiting your chances for a successful petition by booking a free consultation with bilingual bankruptcy lawyer Walter Benenati.

When you file for bankruptcy, be prepared to have a lower credit rating and higher insurance premiums. This implies that you will be locked out of taking more loans, buying property or buying a car.

Reasons to File for bankruptcy

It takes a lot of courage to file for bankruptcy and if you are wondering whether your case qualifies, here are a few pointers that you need to contact your bankruptcy lawyer and chart the way forward: 

• Your debt is too enormous to clear in your lifetime.
• Creditors are constantly calling you
• Suits filed against you are beyond your ability to help
• You have lost your source of income and are unable to clear your debts
• You can barely put food on the table

Types of Bankruptcy

If you decide to go ahead with your bankruptcy claim, it is essential to know the type of bankruptcy that would provide you with the most significant relief. There are two types of bankruptcy: 

Chapter 7 Bankruptcy

Under this code, debtors have their unsecured debts relieved. However, you might end up selling a significant number of your possessions to settle creditor accounts. Such include jewelry, cars and your pension that can undergo liquidation.

If you have a high income, you might not be eligible for this chapter. However, for mortgage owners with up-to-date payments, this chapter can halt foreclosure. Before you commence with your petition, you must enroll in a credit counseling certificate.

Chapter 13 Bankruptcy

Under this code, debtors can pay some, all, or none of their debts. This chapter helps debtors reorganize their debt. You remain liable to pay all your debts under this provision. Your liabilities are consolidated into one and a trustee assigned to you.

With the pooling of debts, you are in a better position to negotiate for a lower monthly payment. This will be based on your monthly earnings, expenses and assets.  Your trustee receives your monthly payment and makes the necessary disbursements to each of your creditors.

If you petitioned for discharge of part of your debts in Chapter 7 with success and you want to try your luck with Chapter 13, you must observe a four-year waiting period. However, if your petition did not sail through, you can proceed to chapter 13 before four years lapse.

Undischargable Debts

Unfortunately, not all debts are dischargeable through filing for bankruptcy. There are three main categories under these debts:

Undischargeable Debts

These include taxes, personal injury debts (from intoxicated driving), child support, alimony and penalties or fines from state agencies.

Undischargeable by Creditor Objection

Such debts include debts on purchases made within 90 days of the petition, fraud-related debts and embezzlement.

Debts Dischargeable Through Legal Exception

Student loans are generally non-dischargeable through bankruptcy unless there is a demonstration of undue hardship verifiable through court tests.

Lawyer Fees

Bankruptcy claims are filed in the United States Bankruptcy Court. Filling a bankruptcy application may be cheaper when you file individually. However, working with a reliable bankruptcy lawyer improves your chances of reprieve and will cost you $1500-$4000, depending on the complexity of your case.

While making a bankruptcy claim might leave you feeling distraught and lost, it can be all you need to get your finances back on track.