Millions of Americans suffer from debt issues, especially right now in the midst of the Covid-19 pandemic. If you’re in deep debt, you may be considering bankruptcy. Before you decide, however, it is best to discuss your case with an experienced attorney. Below are some considerations you’ll need to weigh before deciding if bankruptcy is right for you.
What Kinds of Debt Do You Owe?
It is important to have a clear picture of all your different sources of debt and how they are classified. This could make a big difference when deciding whether to file Chapter 7 or Chapter 13. It will also help you to know whether bankruptcy is truly right for you.
For instance, most unsecured debts can be discharged in Chapter 7 (if you qualify for it). Unsecured means that it is debt without collateral (things like credit card debt, medical bills, etc.). If most of your debt is unsecured, Chapter 7 might be a good option.
But if most of your debts come from things like student loans or overdue taxes, you should know that these are usually not dischargeable in bankruptcy. You may be able to better afford them, however, by reorganizing your other debts in Chapter 13 bankruptcy.
What Are You Unwilling to Lose?
If your home and car are still being paid off and it is critical that you keep them, Chapter 13 is the safer way to go. Chapter 7 requires you to liquidate some assets to partially repay creditors. Chapter 13 doesn’t. However, in order to keep these possessions, you’ll need to become current and stay current on mortgage and loan payments.
Do You Understand the Consequences?
Chapter 13 will stay on your credit report for about seven years, while a Chapter 7 filing will stay on your report for 10 years. During this time, the record of your bankruptcy will make it very difficult to qualify for credit (including a mortgage or other loans). That being said, if you are considering bankruptcy, your credit may already be very poor, in which case bankruptcy may not be such a significant hit to your credit score.
Talk to an Attorney Today
Want to know if bankruptcy is the best option for you? Contact our firm to discuss your case with an experienced debt relief attorney.