Bankruptcy is something that many people unfortunately face and sometimes it’s the only option they have. Is that where you’re at? Is there no other choice than to submit to bankruptcy? There are some basics about bankruptcy laws that you should understand so you know how to move forward with your situation.
What Is Bankruptcy?
Bankruptcy is a debt relief option that is legally allowed for individuals in particular situations. Debts such as personal loans, medical bills, payday loans and credit cards are the types of debts that are typically forgiven. There are several types of bankruptcy options that see Chapter 7 and Chapter 13 being the most common.
- Chapter 7 – This type of bankruptcy happens fairly quickly, often in just 90 days. There are some exemptions that you could qualify for, but many individuals lose assets during this process. To qualify for Chapter 7 bankruptcy, your household size, the state where you live, and your income will be taken into consideration. This type of bankruptcy will remain on your credit report for at least 10 years.
- Chapter 13 – This type of bankruptcy could take between three and five years, though you can often keep many of your assets. Rather than becoming exempt from paying your debts, you would be put on a monthly payment plan. Requirements for Chapter 13 bankruptcy include falling within certain debt limits, and it will remain on your credit report for seven years.
Are There Any Alternatives?
There are some alternatives to bankruptcy, though it takes a lot of hard work to make an alternative successful. Every situation has its pros and cons, and you can work through those with a lawyer to understand which route might be best for you. Some alternatives to bankruptcy could include:
- Contacting your creditor – This won’t work for everyone because many creditors are firm on their terms, but you could contact the creditor to see if a hold can be placed on your account or if you can be put on a different payment plan.
- Creating a budget – Sometimes you can work hard to pay off your debts just by adjusting your budget and dumping every extra penny into your debt. Sticking to the budget at all costs is the best way to be successful.
- Considering debt management or settlement – Debt management is when you work with a company to negotiate a change in interest rate. Debt settlement is when you work with a company to negotiate the amount you owe your creditor. Your lawyer can help you work through either process.
Call Your Bankruptcy Lawyer
When you’re faced with bankruptcy, it can get confusing and scary. Consider speaking with a chapter 13 bankruptcy lawyer in Hartford, CT, so you can learn more about your options and how to get back on track with your finances. Lawyers from a firm like The Law Offices of Neil Crane may be beneficial to you.