When Should You File For Bankruptcy and How Does It Work?
The word “bankruptcy” can strike fear into the heart and mind of even the most stoic individual. It is a terrifying proposition that gives visions of losing a home, precious items and memories being sold just to make ends meet or something equally as frightening. In fact, there are a number of different ways of filing bankruptcy and just because you feel you are in dire financial trouble doesn’t mean you need to do so. So if you are asking “when should I file for bankruptcy” the information here may ease your fears.
Surprisingly enough, there are benefits of filing bankruptcy. It may end up being a positive solution to your financial situation. Doing so could stop wages from being garnished, repossession of materials or foreclosure on a house. While this may sound simple, legal advice is advised.
There are three major types of bankruptcy and all have different benefits and drawbacks. Filing Chapter 7 bankruptcy is known as a straight bankruptcy. It is the liquidation chapter which essentially means your assets are sold and the cash is used to pay off creditors. Which this may seem harsh, for many it can be a fresh start.
The Chapter 11 bankruptcy code is generally used for business who wish to keep their assets and pay off creditors over a period of time. The business may place creditors into various classes of importance or need, decide what to sell and what to keep and overall formulate a plan. This is why it is commonly called business reorganization.
Finally, there is Chapter 13 bankruptcy. If you prefer to keep your property, which many will, this may be for you. It is commonly used when a house is in foreclosure. This method allows debtors to pay off their creditors over a period of usually three to five years if they have consistent annual income.
If at the start if this article you were asking when should i file for bankruptcy, may this information help you along the way. If you feel your debt is out of control, if you don’t know what you owe or if you need to consolidate debt, filing may be the right option for you. Staying calm, formulating a plan and finding legal advice will help you get through this difficult period. Read this for more: sagarialaw.com