Many people have heard about personal bankruptcy. Yet few people are aware of how common it is.
The United States Bankruptcy Court in the District of Minnesota heard more than 7,100 cases in 2020. They expect these numbers to rise as people assess their debts after the pandemic.
When you are faced with mounting debts, you should consider filing for personal bankruptcy. You need to assess your situation and get the facts, including how to file for bankruptcy. Once you do, you can have a smooth and fair legal process. Here is your quick guide on when to file for bankruptcy.
You Are Unable to Pay Back Some Debts
Everyone knows that bankruptcy occurs when someone is unable to pay back large debts. But mounting small debts may also be an indication that a person is unable to pay their debts as they come due.
There are certain payments that bankruptcy does not apply to. You cannot eliminate back child support or most court fines. Some common examples of debts that are eliminated are personal loan, credit card debts, and medical bills. You can eliminate your personal liability on secured debts such as mortgages and car loans, but in most cases you must continue to make the payments if you want to keep the secured property.
There are no debt limits for Chapter 7 and Chapter 11 bankruptcy cases. Chapter 13 bankruptcy does have a limit to how much debt you can have. You can eliminate both large and small debts through bankruptcy.
You Have Chosen the Right Means of Declaring Bankruptcy
Once you have decided that bankruptcy is the right option for you, you need to find the right chapter to file under. There are two chapters that you can consider.
Chapter 7 bankruptcy is best if your real estate and personal property are exempt and you can’t afford to pay even a small portion of your debt.
There is a means test to check that you have little money. In the majority of case, family income must be less than the median family income in the state. You must also have a very small disposable income.
You do not need to submit a repayment plan while filing for Chapter 7. The bankruptcy trustee will take any non-exempt property to pay a dividend to creditors. You can buy back non-exempt property from the trustee if you don’t want to turn it over.
Chapter 13 bankruptcy applies to people with a regular income. It is also good for someone who has equity in their home or other property.
Chapter 13 will allow you to keep your property. You will pay back your debts over several years, making monthly payments to an appointed trustee. Your creditors are not allowed to contact you or change the terms of your debts.
You may have heard of Chapter 9 or Chapter 11 bankruptcy. Those chapters are for municipalities and companies, not individuals.
You Have Spoken to a Personal Bankruptcy Lawyer
You can file for bankruptcy on your own. But a personal lawyer can make the difference between a successful case and an unsuccessful one.
After you file for bankruptcy, you must attend a court hearing. A lawyer can represent you during this hearing, making sure that all your information is correct.
If you file for Chapter 7, your creditors can respond to you. They can contest the elimination of your debts. Your lawyer can talk to your creditors and negotiate with them.
At the very least, a lawyer can expedite your bankruptcy process. They can instruct you on how to file documents and which chapter you should select.
Get a Lawyer When You Are Filing For Personal Bankruptcy
Filing for personal bankruptcy works for many people. It is best when you are facing substantial debts like personal loans and credit card payments. You don’t have to be behind in your payments to file bankruptcy.
Find someone with persistence and experience. Gregory Wald is a leading personal bankruptcy attorney in Bloomington. Contact us today.
