When To File For Bankruptcy

When Is Bankruptcy The Best Option?

Millions of Americans wonder if they should file for bankruptcy protection. Some are faced with unemployment, low credit availability and the specter of foreclosure. While many people will find other alternatives, many are finding that filing for bankruptcy may be their best option. But how do you know if bankruptcy is the right choice for your circumstances?

Filing for bankruptcy protection from creditors can be an excellent tool to regain your financial health but you may have other options. Speaking to experienced and sympathetic bankruptcy attorneys in a consultation may be your best step. If you are not sure which type of bankruptcy to file or if you should file at all, contact the bankruptcy lawyers of Weintraub & Selth, APC. While you can research the law and the process yourself, you may end up costing yourself unnecessary time deciphering the details. We can explain the process clearly and answer your questions in a clear and forthright manner.

When you need advice to make this important decision, call us. Since we have such a wealth of experience, we can offer clear and candid information about the best steps for your situation.

How Do I File For Bankruptcy?

Personal bankruptcy is a legal process designed to discharge or eliminate debt through Chapter 7 of the U.S. Bankruptcy Code or a reorganization of debt through Chapter 13. Though both are tools provided by the federal government to assist people struggling with financial challenges, the two processes are quite different:

Chapter 7 bankruptcy is also known as liquidation. This is a process by which most unsecured debts are eliminated and the debtor is no longer responsible for them. Many Chapter 7 bankruptcy debtors have no significant assets to be liquidated so the unsecured debts are simply discharged.

Chapter 13 bankruptcy was developed to help people reorganize their secured debts (such as car loans or mortgages) so they can get back on the way to financial stability. The debtor is placed on a reasonable repayment plan that usually lasts from three to five years. If the debtor pays according to the plan, unsecured debts are usually discharged at the end of the plan.

When you contact us for a consultation, we will listen to the details of your case and we may be able to determine which process you should pursue in a very short amount of time. As we gather information about your situation, we will use a formula to determine which bankruptcy filing you qualify for or suggest alternatives.

Personal bankruptcy is intended to help debtors in the following ways:

  • Eliminates or reduces debt
  • Gives debtors time to work on a solution
  • Stops creditor harassment
  • Stops foreclosure or repossession

The benefits of filing are almost immediate. For instance, once you file for protection, creditors must cease contacting you for repayment.

What Chapter Should I File Under?

The right chapter to file under depends upon many variables. In general, Chapter 7 is better for people who have a lot of unsecured debts, such as credit cards, medical bills, utility bills, and similar debt. It also helps people that do not own much property and have a low income. Chapter 13 is a better option for those who have an average or above average income and who have nonexempt property that they want to keep. Some additional benefits of both chapters include the following:

Chapter 7 bankruptcy:

  • Allows you to keep exempt assets, such as your home or car
  • Eliminates most or all of a debtor’s unsecured debt and allow reestablishment of credit
  • Stops creditor action through an automatic stay order from the Bankruptcy Court

Chapter 13 bankruptcy:

  • Is a good option for people who are facing short-term financial setbacks, such as job loss, illness or unexpected expenses
  • Stops creditors through an automatic stay and gives the debtor a chance to repay debts in three to five years
  • Stops mortgage foreclosure and other repossessions

Chapter 11 may also be a viable option if your business is struggling. Determining which debts are secured and which are not, determining the worth of your assets, identifying all of your debtors and other details of your situation will be much easier with the help of allies. By contacting Weintraub & Selth, APC, you will gain priceless peace of mind that comes from having experienced attorneys working with you.