If you are struggling to pay your bills and have accumulated excessive debt, then you have probably considered filing bankruptcy. Financial difficulties can be especially stressful. Along with the barrage of telephone calls and threatening letters from debt collectors, many people are also faced with foreclosure or eviction from their home.
Perhaps the greatest benefit of filing bankruptcy is that it can help relieve some of this financial stress.
Financial problems can lead to marital problems, health problems, employment problems, and other life problems. Once the financial aspect of a person’s difficulties are resolved, quite often other problems are much easier to handle.
There are two types of bankruptcy most commonly used for individuals – Chapter 7 and Chapter 13. Chapter 7 is by far the most common. Advantages of Chapter 7 include:
- Quick in and out (typically from 3 ½ to 4 months).
- Nearly all debts are discharged (eliminated). Exceptions include alimony, child support, certain tax debts, and, in most situations, student loans.
- In most cases, all assets can be retained, although there are exceptions to this statement.
A Chapter 13, formerly called a wage earner plan, is the other bankruptcy most commonly used for individuals. Under Chapter 13, you will be required to make payments in an amount your attorney will calculate for you as against your debts. A number of factors go into the amount you will be required to pay.
Chapter 13 bankruptcy is most often chosen when it is necessary to stop a foreclosure or other threat against property of the debtor.
Chapter 13 is also utilized when there are assets in danger of being lost under a Chapter 7.
Chapter 13 plans can be for three years or five years, depending on the situation presented.
One of the most common reasons that people are reluctant to file bankruptcy is that they worry about the negative effect that bankruptcy will have on their credit rating. A bankruptcy filing will stay on your credit report for up to 10 years. However, the sooner you file bankruptcy and get rid of the debts that negatively affect your credit, the sooner you can begin rebuilding your credit and your financial future. Further, bankruptcy has become so commonplace in today’s society that most people who have steady employment and income may qualify for consumer credit – such as car loans or credit cards – soon after filing bankruptcy.
The rule of thumb in connection with mortgages is that, assuming other factors are favorable, a mortgage can be obtained two years after a bankruptcy is completed.
An experienced and knowledgeable bankruptcy attorney can help you decide if filing bankruptcy is right for you, or explain other options that may be available to make your debt more manageable such as credit counseling, negotiating with creditors, or debt consolidation.
Our board certified bankruptcy attorney, David R Hillier, has more than 35 years of experience helping clients with bankruptcy and debt relief. If you reside in Western North Carolina and are considering filing for bankruptcy, please call our office at 828-258-3368 and schedule an appointment for a free consultation.