Have you found yourself in deep financial trouble? If you’re struggling to keep up with your monthly payments, then you should consider if bankruptcy is right for you. You might be terrified at the thought of filing bankruptcy, but it might be the only way you can reach the light at the end of the tunnel. Before filing for bankruptcy, it’s important to understand your options and if filing will benefit you.
Knowing When to File
Sometimes you might find that you’re struggling to pay your debts because you’ve just started a new job and are waiting to get paid, or perhaps you’ve been sent an incorrect bill and are getting calls about the payment due while you’re trying to figure the situation out. Those are not situations where you would want to file for bankruptcy.
However, if you find yourself dealing with two or more of the following situations, then you should consider talking to a bankruptcy lawyer Rockville MD.
- Constant harassment from bill collectors
- Rely on credit cards to pay for necessities
- Have only been able to make minimum payments on debts for six months or longer
- Unsure how much debt you actually have
- Have multiple maxed-out credit cards
Dealing with excessive debt is draining and can cause issues like anxiety and depression, so you want to address the situation as soon as possible when things start to get out of control.
Understanding Chapter 7
With a Chapter 7 bankruptcy, you’re required to show proof of all of your assets and sign them over to the court. A trustee will then liquidate those assets and use the money from them to pay as much of your debt as possible.
If you own a car and are current on the payments or own it outright, you’ll likely be allowed to keep the car. Similarly, if you own a home and aren’t behind on payments, and there isn’t much equity in it, then you can most likely keep it. However, if you have a lot of equity in the house, you’ll be required to sell it to pay your debts.
Understanding Chapter 13
Under Chapter 13 bankruptcy, you work with creditors to reorganize your debts and pay for them over an extended period. You’ll typically be given anywhere from three to five years, depending on the amount of debt and how much income you bring in every month. This bankruptcy is best for people who have a lot of assets and don’t want to lose them in the bankruptcy process.