Many things that are out of your control can quickly devastate your finances, from losing your job to sustaining a health crisis. Even with the best budgeting, debt counseling, and financial responsibility, sometimes the debt is simply too massive to overcome. And while not a first resort of debt relief, many consider filing for bankruptcy.
If you are thinking about filing for bankruptcy, your first step will be to discuss your situation with a lawyer who can help you decide which option is best for you as well as help you file. Request a free consultation with a bankruptcy attorney in Marietta at Ghai Law Firm: 770-233-7474.
Is it time for me to start considering bankruptcy?
Bankruptcy is not the right choice for everyone who is having a financial hardship. If a large portion of your debt includes things such as income tax, child support, and student loans, bankruptcy might not be a sound choice because those types of debts are non-dischargeable. Also, if you have yet to try other remedies such as debt counseling, increasing your income, and negotiating with your creditors, then those are the places to start.
If the following situations apply to you, it is generally a good indicator that it is time to start giving serious thought to filing for bankruptcy.
- You cannot make the minimum payments on credit cards.
- You are using one credit card to make payments on another.
- The credit card companies have already jacked up your interest rates due to overdue payments.
- You have considered taking out some of your retirement money or getting an equity loan just to pay your debts.
- You have already taken on a second job to make ends meet and pay your debts off, but it is still not enough.
- You have received notices of lawsuits from creditors.
- You home is at risk of or is already in foreclosure, and/or your car is in danger of repossession.
- The financial strain is taking a major toll your personal life. The stress is affecting your marriage and your job, and thoughts about debt are consuming far too much of your time.
What is difference between Chapter 7 and Chapter 13 bankruptcy?
There are several significant differences between Chapter 7 and Chapter 13 bankruptcies. The chief difference between them is that with the former, you do not have to pay back your creditors; with the latter, you do, albeit at a negotiated lesser amount. Below are few more distinguishing characteristics of each type of action.
Chapter 7 – Chapter 7 bankruptcies are also called liquidation bankruptcies because the trustee that the court assigns to your case will have to liquidate your nonexempt property to pay off your creditors. In a Chapter 7, you can opt to keep certain property, such as your home and your car and continue to pay on them if you so choose.
You must meet certain disposable income threshold qualifications in order to file a Chapter 7. Your lawyer can help you determine if you qualify. If all goes well and the courts discharge your debts, you could walk away debt free in three to six months.
Chapter 13 – Chapter 13 bankruptcies are also called reorganization bankruptcies because the trustee will essentially reorganize your debt into a single debt repayment plan. With a Chapter 13, you get to keep all of your property, including both exempt and nonexempt. You have to pay back your debts, but oftentimes, your debts will be reduced. This type of bankruptcy allows you some breathing room so that you can catch up on your bills.
Most people only opt for a Chapter 13 if their income is too high to qualify for a Chapter 7, and in cases where they need to stop a foreclosure on a home. When all is said and done and your Chapter 13 case finalized, you will be locked into a three- to five-year debt repayment plan. When you have satisfied it, you will be done and debt free.
A Marietta, GA lawyer can sit down with you and discuss the differences between Chapter 7 and Chapter 13 bankruptcies and which is best for your unique situation.
What are the downsides of filing for bankruptcy? What are the benefits?
When you file for bankruptcy, it will stay on your credit report for up to ten years. A bankruptcy could lower your credit score, which could make obtaining loans and other lines of credit harder in the near future.
The benefits of claiming bankruptcy are notable. First and foremost, it can be the fresh start you need to regain peace of mind and control over your financial life. Creditors will stop harassing you and you will be able to sleep better at night.
If you have lawsuits pending against you for your debts, those cases will be dismissed, and if you have wage garnishments for non-exempt debts, those will cease as well. Also, if your home is in foreclosure, those proceedings will be delayed and potentially defeated so that you can keep your home.
Can Ghai Law Firm help me with a bankruptcy in Marietta?
Our firm has helped thousands of Georgians start their new lives and assist them with their bankruptcy proceedings. We accept all types of bankruptcy cases in Marietta and the surrounding areas. We know how stressful financial matters can be and how weighty a decision filing for bankruptcy is. During our first meeting, we can answer any questions you have and explain what to expect in the coming months.