Many people who are struggling financially think that declaring bankruptcy means that they have failed somehow. They are looking at it from the wrong angle. Instead, they should consider that bankruptcy is a way to have a new start in life.
For individuals, the two most common forms of personal bankruptcy are known as Chapter 7 and Chapter 13.
Chapter 7 is commonly known as “liquidation bankruptcy” because it requires a person to sell some of their assets in order to satisfy their creditors. However, there are many exemptions to the liquidation requirement, meaning that a Chapter 7 filer will be able to keep their most important possessions.
The Chapter 7 process can be completed in 3-5 months. At the end of that time, the court will discharge many of the filer’s remaining debts, leaving them free to start over with their finances.
While Chapter 7 may offer the fastest and most complete bankruptcy relief, it is not the only option. Before choosing Chapter 7, consider the following:
- The advantages of chapter 13 bankruptcy: This type of bankruptcy allows the debtor to save their home from being foreclosed because they are allowed to catch up on past due payments by setting up a payment plan. It is a good option for people who have a steady source of income.
- Using the means test: If a debtor’s monthly income is greater than the state median, according to the U.S. Bankruptcy Code, an application is required for a “means test,” which will determine whether the person should really be allowed to be granted chapter 7 bankruptcy.
- Other arrangements: It is also possible for the debtor to make a private arrangement with the creditor to resolve the debt. Additionally, debt counseling services might offer an alternative to filing for bankruptcy.
Solid legal advice from an Indiana bankruptcy attorney
If you are struggling financially, the first thing that you will need to do is to figure out which type of bankruptcy you are eligible for. If you are eligible for Chapter 7 bankruptcy, you will no longer be responsible to repay your debts to your creditors. A knowledgeable Indiana bankruptcy attorney can help you to get onto the right path so that your financial struggles can be resolved. The attorney can walk you through the process and offer the most effective solution to your particular problem while protecting your rights at the same time.