When Filing for Bankruptcy Becomes the Next Best Option

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Many people can feel embarrassed to admit that bankruptcy may be the best option for them, especially when drowning in debt without making enough to fully recover. Before filing, a person may want to discuss their situation with a bankruptcy lawyer Clearwater, FL offers in order to know more about the process and which chapter could be the most helpful. Here we have answered a few questions that an applicant may ask before finally submitting the paperwork to their local court:

Q: It is required that I file for bankruptcy if I am a certain amount in debt?

A: While it is not necessary that you file for bankruptcy due to debt, it may be a resource for you in your debts are more than your income and assets combined. Filing for bankruptcy may not eliminate all of your debts, as some chapters require that you pay off your debts a little at a time over the course of several years. You may want to meet with a legal professional about the pros and cons to applying for bankruptcy based on your current situation.

Q: Will applying for bankruptcy help me with creditors?

A: Once you have completed your bankruptcy paperwork and filed it, the court clerk can notify your creditors of the bankruptcy application (in which they are no longer permitted to contact you). A creditor may pursue a meeting with you after receiving the notice regarding your bankruptcy filing. So while they are not allowed to contact you through phone or email about late payments, they can request to speak with you directly but must go through bankruptcy court to do so.

Q: How do I know whether chapter 13 or 7 is the best option for me?

A: There are several bankruptcy chapters, and some people may be better suited for one or two over the others. Chapter 13 permits the person to pay his or her debts over a longer period of time using a court-enforced payment plan (typically around 3-5 years). Under chapter 13, unpaid debts may be discharged but with certain exceptions. The payment plan is created based on disposable income, which is how much is left over after rent, food and necessary living expenses are paid.

Chapter 7 may be the preferred option for those who do not want a repayment plan. But, the applicant may need to let certain belongings be repossessed that were on loan in order to pay off the debts. Those who are not attached to certain items may want to just eliminate a large portion or entirely of their debt in this way, versus making payments through chapter 13.

Q: Who will be informed about my bankruptcy status?

A: Bankruptcy filings are public, but this does not mean your personal details are available to just anyone. In general, loved ones of the person filing for bankruptcy are unlikely to find out unless told directly by the applicant. A note regarding your bankruptcy filing will be submitted to all your creditors and co-debtors, in addition to remaining on your credit report for 7-10 years.

 


 

Thank you to our friends and contributors at The Law Office of Michael A. Ziegler Law, P.L. for their insight into bankruptcy and when it may be the best option.

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