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Understand the benefits and types of bankruptcy

On Behalf of | Apr 22, 2020 | Bankruptcy

One of the most disheartening things that you might have to deal with when you can’t afford to pay your bills is explaining to your creditors what’s happening. Some might pressure you into finding a way to pay them, but it might not be possible for you to do that. When you have more bills than money each month, you may notice that you’re sinking into a deep financial hole.

When you realize that you need to take control of your finances, you might decide that filing for bankruptcy is the best option for you. Most people who file use Chapter 7 or 13 to get the relief they need. While these are both personal bankruptcy options, they are markedly different.

In a Chapter 7 filing, you have to pass a means test, which proves that you don’t have the ability to pay the debts. Once any of your nonexempt assets are liquidated to pay creditors, the remaining balances are forgiven at the end of the bankruptcy.

In a Chapter 13 filing, you need to show that you can cover your necessary expenses and still have some money to make payments toward your debts. These are made for three or five years to the trustee over your bankruptcy. Once you make the payments as ordered, the balances are discharged when the bankruptcy ends.

Because there can’t be preferential treatment for any single creditor, the court will issue the automatic stay when you file your case. This prevents collection attempts and forces impacted creditors to abide by the decisions of the bankruptcy court for your case.

Give The Law Office of Russel Gary Small PC a call to discuss your bankruptcy options.