September 1, 2020When to Consider Filing for Bankruptcy
Filing for bankruptcy in Park Hills, MO is often a last resort, but when your debt is piling up and you’re struggling to get out from underneath, it can provide a much-needed fresh start. It’s not a cure-all—bankruptcy comes with some long-lasting consequences. However, if you owe more than you can afford to pay, it may be the best solution. Here’s how to determine whether bankruptcy might be right for you.
What is your financial situation?
If bankruptcy is starting to sound like an attractive option, you’ll need to take an in-depth look at your financial situation. How much do you own, and how much do you owe to your creditors? Are you unsure or scared to think about your financial situation?
Consider all liquid assets like retirement, college, investment and savings accounts, houses, cars and other real estate. If the total value is less than what you owe to your creditors, or if there’s no way you can pay down your debt in 36 months, bankruptcy is likely a viable option.
Other questions you should consider include whether you can make more than the minimum payment on your credit cards, whether you have to use credit cards to pay for necessities, whether bill collectors are calling you and whether you’ve ever considered debt consolidation. If you’ve answered “yes” to two or more of the questions in this section, bankruptcy might be a smart choice. Talk to a bankruptcy attorney in Park Hills, MO before making any major decisions.
Reasons to consider bankruptcy
Bankruptcy doesn’t erase your debt, but it can significantly reduce your burden. Depending on the type you file, you might be on a three- to five-year payment plan while you keep some of your assets, or you may need to liquidate your assets to repay creditors and have remaining debt discharged. It will also keep bill collectors from harassing you further.
However, bankruptcy is not to be taken lightly—it will drive down your credit score and remain on your credit report for years to come. Some debts are not dischargeable, either. If you file for bankruptcy, make sure to talk to a bankruptcy attorney in Park Hills, MO about the repercussions as well as the benefits.
What kind of bankruptcy should you file?
There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy requires the debtor to pass the “means test,” demonstrating that they do not have the financial ability to pay off their debts. Their assets are liquidated (except for those needed for shelter and to work), then used to pay creditors. At the end of the proceeding, the debt is discharged.
Chapter 13 bankruptcy allows debtors to keep assets like homes and cars, but the debt is lumped into one sum and paid over a three- to five-year period. If you miss a payment, your bankruptcy case is dismissed—and you’re still on the hook.
To talk to an attorney about filing for bankruptcy in Park Hills, MO, contact Maynard & Joyce, LLC today.