Consumers and businesses can repay their debts under the protection of the Federal bankruptcy court when they file for a bankruptcy. All you need is to choose which type of bankruptcy is right for you — liquidation (Chapter 7) or reorganization (Chapter 13).
Chapter 7 bankruptcy is the most common type as it is simple and quick to process. Unsecured debts like credit card, personal loans, and medical debts are discharged provided that you sell some of your assets to pay for them. Chapter 13 bankruptcy, on the other hand, lets you keep your properties and repay your debt in three to five years.
Eligibility: Who Can File For a Chapter 7?
Filing for a Chapter 7 bankruptcy is not for everyone. To qualify, you must first pass a means test where officials will check your income. You won’t qualify for Chapter 7 bankruptcy if your disposable income — deducting certain allowable expenses, as well — is enough to sustain or fund a Chapter 13 repayment plan. This means the test may differ from state to state.
Why Declare Bankruptcy?
You should seriously start thinking about filing for a bankruptcy if your debts are more than your annual income and it would take you more than five years to repay all your debts. Your debts can also seriously interfere with your relationships and other aspects in your life, resulting in a poor quality of life.
When filing for a Chapter 7 bankruptcy in Sandy, Utah Bankruptcy Pros noted not to underestimate the value of hiring a lawyer and other experts in the field. They will be the ones to guide you so you do not miss out on important details of the process.
Bankruptcy does have a stigma, but if you are already debt-ridden, this is still the best solution for you. It can make your quality of life a lot better, as debtors will stop hounding you. Yes, it might affect your credit score for a few years but after a while, it will start to get better.