Is Bankruptcy the Answer? How to Decide
Filing for bankruptcy is a big decision that can change your life and set you on the path to financial success. However, just because you’re currently struggling with finances doesn’t mean bankruptcy is necessarily the answer. Here are several ways to decide whether bankruptcy is right for you. Always consult a bankruptcy attorney in Arizona before moving forward. An experienced bankruptcy lawyer can help you determine the best course of action for you.
Understand the Different Bankruptcy Options
For individuals, there are three different kinds of bankruptcy. These are broken down into Chapter 7, Chapter 11 and Chapter 13. With Chapter 7, most if not all of your debts can be discharged, usually in a three- to six-month window. Chapter 13 allows you to use your current income and make payments on debts over a set period of time based on your ability to pay (typically three to five years). Chapter 11 is available for individuals whose debts exceed the statutory debt limits of a Chapter 13.
Alternatives to Bankruptcy
You can avoid bankruptcy. Perhaps you’re only considering it because of all the harassing phone calls from creditors. However, with the help of a bankruptcy attorney, you can negotiate with creditors. This will increase the chances of creditors working with you. After all, it is better for them to receive something than nothing.
A debt counseling option may be better for you as well. If you have the money to pay back debts but you’re struggling to manage them, financial counsel can help get you on track. A debt counseling service can set you up with a specific payment plan. However, if you’re ever late or miss a payment. Chapter 13 bankruptcy offers you protection against collectors whereas debt counseling does not.
Review Terms of Payment
If most of your debts cannot be cancelled, it doesn’t do much good to file for bankruptcy. Many forms of student loans and child support cannot be discharged. Your Arizona bankruptcy attorney can help you identify what forms of debt you simply can’t rid yourself of, as well as possible repayment options.