Bankruptcy: A Disturbing Word |
By Kenneth Long on January 20, 2010
.jpg.aspx?width=75&height=75) Bankruptcy is more than just a disturbing word. It is a legal process where you gain protection from your creditors by proving insolvency.
Bankruptcy can be embarrassing since it is a public record that announces your filing to the general public. It can also have substantial costs, which can rise dramatically the more complicated your case is.
Despite the negative aspects that go along with bankruptcy, sometimes it is an appropriate resolution to a hopeless financial situation. Understanding the process can help you decide whether to seek legal counsel or to attempt to avoid bankruptcy by pursuing other means.
Alternatives to Bankruptcy
Bankruptcy should generally be viewed as a last resort. See what options might be a better solution to dealing with debt when you have faced financial hardship.
Chapter 7 Bankruptcy Process
A Chapter 7 bankruptcy filing often entails more than just liquidating your assets. Certain property might be considered exempt by the court. Likewise, some debts may not be cancelled by a Chapter 7 filing.
The Means Test for Bankruptcy
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) changed eligibility requirements for Chapter 7 bankruptcy. It establishes a means test for which your income could impact your filing options.
Chapter 13 Bankruptcy Process
A bankruptcy filing under Chapter 13 can be more complicated than Chapter 7. This process can cost more as you repay your debt over a number of years.
Pros and Cons of Chapter 13 Bankruptcy
Filing for bankruptcy protection under Chapter 13 can offer relief from creditors. There are certain advantages as well as disadvantages to filing under Chapter 13 as opposed to a Chapter 7 filing. Consider the pros and cons carefully during the discussions with your attorney.
Bankruptcy can be a complicated legal process. While there is no requirement to obtain an attorney in order to file, most debtors find that it is preferable to obtain legal counsel that is familiar with the complexities of bankruptcy.
A Chapter 7 filing can sometimes be as low as $1,000, whereas a Chapter 13 plan could easily top $2,500. If your household is considered low income, then you may try contacting your local Legal Services Corporation office to see if you qualify for free legal assistance. |
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