If you’re struggling to keep up with your financial obligations and feeling overwhelmed by your debt, it may be time to consider filing for personal bankruptcy. However, before you decide whether filing Chapter 7 bankruptcy is the right choice, it’s important to understand whether it makes financial sense in your situation.
Curious whether you should consider filing for Chapter 7 to alleviate your financial burden? Below, Ron Lunquist, Attorney at Law discusses signs that Chapter 7 bankruptcy may be in your best interest.
Your Debt Outweighs Your Income and Assets
If your debt is overwhelming and you make a modest income, paying your bills can seem impossible. If the total of all your debts adds up to more than 50% of your annual income, there’s a high probability that you’ll have difficulty getting your head above water on your own. If this is your situation, filing for Chapter 7 bankruptcy may be in your best interest.
Before you can file, you’ll need to pass a means test, which determines whether you have adequate disposable income to repay what you owe. Typically, if your annual income is at or below the median income for your state, you’ll qualify to file. However, other stipulations also come into play when determining whether you’re eligible, which is why working with a knowledgeable bankruptcy attorney is so important.
Most of Your Debt Is Dischargeable
Chapter 7 bankruptcy only eliminates dischargeable debts, which means it’s only appropriate for certain individuals. Not sure whether your debts are dischargeable? Some examples of dischargeable debt include:
● Credit card debt
● Medical bills
● Unsecured personal loans
● Collection agency accounts
● Past-due utility bills
● Business debts
● Unpaid taxes and tax penalties (if they’re past a certain number of years)
If you can prove undue hardship, it may be possible to get your student loans discharged by filing Chapter 7 bankruptcy too. While the above list details some of the most common types of dischargeable debt, it’s by no means comprehensive. An experienced bankruptcy attorney can review your debts and advise you whether filing Chapter 7 is the right option for your situation.
You’re Worried Your Wages May Be Garnished or That You May Be Sued
If you’re seriously delinquent on your bills and you’re worried your creditors may take legal action against you, filing for Chapter 7 bankruptcy can be incredibly helpful. After you file, creditors are no longer allowed to initiate or continue any action against you to collect on your debts. If they do, they’ll face legal repercussions.
Keep in mind, though, that filing for Chapter 7 will not eliminate all of your debts, depending on their scope. That why it’s critical that you consult with an experienced bankruptcy attorney to determine whether filing for personal bankruptcy will protect you.
Need Advice on Filing for Chapter 7 Bankruptcy? Contact Ron Lundquist, Attorney at Law
If you need the expertise of a bankruptcy professional, get in touch with Ron Lunquist, Attorney at Law today. For over 20 years, my firm has proudly served Twin Cities residents, and I’m here for you in your time of need too. To learn more or schedule a free consultation, call my office today at 651-454-0007 or send me a message, and I’ll be in touch.