Considering bankruptcy? Asking yourself these 3 questions will help you decide how to proceed.
Are you struggling with debts that seem to just keep growing and growing no matter how hard you try to pay them off? It may be time to consider bankruptcy. As you make your decision, consider these 3 questions.
What Debts Are You Most Worried About?
It is important to consider what types of debts are causing the biggest burden because this may affect which type of bankruptcy you decide to file. For personal bankruptcy, the two main choices are:
Chapter 7 Bankruptcy: Chapter 7 bankruptcy is typically the best option for individuals who are burdened primarily by unsecured debts such as credit card debts, medical bills, payday loans, certain back taxes, personal loans, and other types of debt that are not backed by any sort of collateral. Assuming you can pass the means test, Chapter 7 bankruptcy will provided for these debts to be discharged completely.
Chapter 13 Bankruptcy: If you are more worried about loans that are backed by collateral—such as your home or a vehicle—Chapter 13 bankruptcy is the way to go. Chapter 13 bankruptcy will bundle these debts together with any unsecured debts you have and create a repayment plan for you to follow for 3 to 5 years. At the end of the plan, any remaining portion of the debts will be discharged.
Do You Have a Good Income?
It is very important to consider your income when thinking about bankruptcy because Chapter 7 is means tested. This means it is not available to individuals who are considered high earners or who have significant income left over each month after paying their essential living expenses. While the best way to figure out if you qualify for Chapter 7 bankruptcy is to have an experienced bankruptcy attorney go over the means test with you, you can get a basic idea yourself by adding up all your monthly living expenses and subtracting them from your monthly income. If you get a negative number and you do not have an extravagant lifestyle, it is likely you will pass the means test.
Have Debt Collectors Started Hassling You?
If you have already had debts go into collections and collection agencies are now calling you day and night, this may be a very good indicator that it is time to stop procrastinating and call a bankruptcy attorney. Why? Because as soon as you file for bankruptcy, all collection activities must stop. This can provide very welcome relief from the annoying attentions of debt collectors.
Call California Bankruptcy Relief Today
If you would like more information about your bankruptcy options, please contact us at 951-755-1000 now.
