When people are having difficulty dealing with staggering debt, they may turn to bankruptcy as a last resort. There are different types of bankruptcy, and one that’s right for you depends on your financial situation, as well as the type of industry you belong in. An experienced Chapter 7 bankruptcy lawyer such can shed some light on what form of bankruptcy makes the most sense for you to file, as well as provide general legal support regarding debt relief inquiries.
Do I Qualify For Bankruptcy?
When you are no longer able to pay off debt, you may become eligible for bankruptcy. In Arizona, what type of bankruptcy you are eligible for is based on your income as well as residency. The government conducts a means test to evaluate your income. The more assets you have, the more complicated it can be to confirm the results of the means test, so it would be helpful to seek the advice of a lawyer to review your financial records.
Bankruptcy may be an appropriate solution if the following statements apply to you:
- You have a low credit score
- You are struggling to pay off principal balance
- You are experiencing harassment from creditors
What Types of Bankruptcy Are There?
Two of the most common forms of bankruptcy are Chapter 7 and Chapter 13. There are several key advantages and disadvantages for both.
- Chapter 7. This type of bankruptcy is one of the most common types that individuals file for, especially those that want to eliminate much of their debt. Chapter 7 bankruptcy allows you to discharge most types of debt, such as credit card debt, medical bills, utility bills and personal loans. However, trustees can sell your assets and if much of your debt includes student loans, they will not be discharged under Chapter 7 bankruptcy.
- Chapter 13. If you are looking to retain your assets or reorganize your debt into a more manageable payment plan, Chapter 13 bankruptcy may be a better option. Chapter 13 is a slower process compared to Chapter 7. Unlike Chapter 7 bankruptcy, Chapter 13 is completed over years instead of months.
It is better to evaluate your legal options regarding debt relief sooner than later. Filing for bankruptcy can have many benefits and allows you to start fresh and get your finances back on track. If you would like to explore bankruptcy and other alternatives, consult with an experienced bankruptcy lawyer to discuss your options.