Even when money is managed in the most responsible way, things can happen in life that lead to debt. In the most serious cases, a person’s debt can pose risk factors like foreclosure and wage garnishment. Filing for Bankruptcy is a way to avoid extreme measures like this. It’s a strategic way to salvage financial health. If a debtor is earning a steady and reliable income, Chapter 13 bankruptcy is a viable option. People in this position earn enough money to pay for living expenses, but are too far in debt to catch up without disbursing all their earnings.
Chapter 13 bankruptcy allows a person to restructure their debts so it can be paid off feasibly. Bankruptcy representatives work with creditors in their client’s behalf to readjust debts in a manner that’s in agreement with their flow of income. This is accomplished by stretching out the time given to pay off debts with the option to have a portion of the debt forgiven if good faith payments are made over an extension of time. Those who take advantage of this opportunity generally have 3 to 5 years of monthly instalments that cover all debts. After this extension, any left over debt is dismissed.
Business stakeholders who have run into debt that’s too difficult to control can file for Chapter 11. Filing for Bankruptcy in businesses is a security net that stops a company from closing. While business management has more time to reorganize debt, business can keep running as usual. A business meets the qualifications for Chapter 11 if company budget and debt can still be managed with the privileges of bankruptcy in effect. If the company can prevail over the debt after it’s reformed, Chapter 11 is the right decision.
Chapter 7 is for individuals who have valuable assets they can give up to pay off debt. People who can liquidate their home, car and other valued assets are fit for Chapter 7. Bankruptcy lawyers meet with clients to discuss the current status of their assets and how to avoid seizure of the items they’d like to keep. In Chapter 7, most assets don’t have to be taken. Clients will learn from their lawyer how the liquidated assets cover the debt. Some debts are void from Chapter 7 like student loans and child support. Contact Thompson and DeVeny Co. LPA to find out what form of bankruptcy is suitable.
