Bankruptcy: To File or Not to File
You may find yourself in a difficult financial position. Your debt is accumulating, and you’re not confident about making payments anytime soon. The good news is that you have options to manage your debt and prevent your situation from spinning out of control.
Barski Law Firm PLC, an Arizona bankruptcy firm, shares that you may qualify for debt relief to pay off a credit card or medical debt. Debt relief options allow you to negotiate with creditors to reduce your payments. If this solution is not an option, you may have to file for bankruptcy.
The Need for Legal Guidance
Filing for bankruptcy is a big decision, whether you’re doing it for yourself or for your business. It’s a process that requires the experience and expertise of a bankruptcy attorney.
A lawyer will tell you if you should file for Chapter 7 or Chapter 13, both of which come with certain requirements. Businesses typically use Chapter 11.
Qualifying for Certain Bankruptcy Codes
Chapter 7 is when you turn over and sell your non-exempt assets. The liquidated assets then pay for your debts. You qualify for this bankruptcy if you have no means to repay your creditors.
You can consider Chapter 7 if you’ve had a significant reduction in your income or if you have substantial medical bills or credit card debt.
Chapter 13 will allow you to repay your debt over a certain period, maybe within three to five years. You can do so without paying an interest to unsecured debts. And you may keep all your properties. But you need to meet a certain amount for your secured and unsecured debts to qualify for this bankruptcy code.
Chapter 11, meanwhile, focuses on restructuring your debts in an effort to still secure your profitability as a business. This bankruptcy code is ideal because it can stop a foreclosure on your home, prevent wage garnishment, and remove judgment liens, among other benefits.
You qualify for Chapter 11 if your property’s underwater, if your business is profitable but needs debt relief, and if you can’t meet minimum payments.
Bankruptcy is not an easy decision, but it’s not the end. With the professional help of an attorney and an understanding of the bankruptcy codes, you can reclaim control and work toward improving your financial situation.