Many people who could benefit from filing bankruptcy put off doing so because they aren’t sure if it’s a wise choice or they’re eligible. They may wonder if they have too much or not enough debt to make filing worthwhile. A relatively small amount of debt could lead to bankruptcy if you don’t have the income to cover minimum payments, and having a healthy income doesn’t mean that you can’t get into debt over your head. No matter the dollar amount you’re dealing with, if your bills have become unmanageable, it may be a good idea to begin researching bankruptcy.
When we meet, we’ll discuss the basics of your situation and then we’ll conduct the means test to help us decide which chapter of bankruptcy might be the best fit for you. This calculation looks at your income, living expenses, debt, and assets to come up with your disposable income. If you do not have enough disposable income to pay off your debt, you pass the test and are eligible for a Chapter 7. This type of bankruptcy discharges most types of debts, specifically unsecured debts, and there are no limits on the amount that may be discharged. You may only file a Chapter 7 once every eight years, so before filing, you’ll want to make sure it’s the optimal time for your situation. If you’re drowning in your debt, even if it’s not much, a Chapter 7 might give you the new start you need.
When people do not pass the Means Test, they may worry that they are stuck with their debt and its consequences forever. Fortunately, there are other options, such as Chapter 13 bankruptcy. Rather than an immediate discharge of unsecured debts, a Chapter 13 consists of a reduced repayment plan that lasts for three to five years. The plan will be based upon your disposable income, and once you’ve made your payments during this time, your remaining debt will be forgiven. This could result in you paying pennies on the dollar of your original debt.
As with a Chapter 7, there is no minimum amount of debt you must have to file a Chapter 13, but there are maximum limits set. You may not have more than $360,000 in unsecured debts or $1,081,000 in secured debt. Even if you owe more than those amounts, there are several other options available, and I’ll work with you to find the right solution.
Don’t Go It Alone
Each decision related to your finances is important, and it can be overwhelming trying to decide what to do on your own. If you’re uncertain about the best way to handle your debt, I can help. You may just need to make some budgeting adjustments and work with your creditors for more manageable payment plans, or it may be time to take advantage of the many benefits of bankruptcy. Either way, now is the time to take control of your finances and make a new start.