Whether debt has come because of medical bills, unemployment, excessive spending, or college tuition, it’s a common situation. Bankruptcy may help those in distress get the fresh start they need, and many have considered filing. Read on to learn some important facts about bankruptcy and its benefits.
When Is the Right Time to Think About Bankruptcy?
Anytime a person’s income isn’t enough to pay their debts and their monthly bills, bankruptcy is a worthy consideration. A Cheap Bankruptcy Lawyer In Tacoma WA will help the client take a look at their debts, and if they exceed monthly income, bankruptcy is an option. While some debts, such as child support and student loans, can’t be discharged, others can.
Chapter 7
In Chapter 7 or liquidation bankruptcy, the debtor’s assets are sold to pay creditors. After the paperwork is filed, a court-appointed trustee investigates the client’s financial affairs, and, if necessary, sells their assets and disburses the proceeds to creditors. Certain assets are exempt, and the situation only applies when those assets’ value exceeds the maximum allowable exemption.
Chapter 13
If a debtor isn’t eligible for Chapter 7, or they’re trying to protect their assets, Chapter 13 may be the right solution. In this type of bankruptcy, a client proposes a plan to pay back their debts over time. One of the biggest benefits of Chapter 13 is that it can handle non-dischargeable debts.
Potential Drawbacks of Bankruptcy
Filing for bankruptcy affects a client’s credit score. However, if their score is already low, the impact is diminished. A bankruptcy stays on a credit report for several years, but that time will undoubtedly be shorter than that required to pay off debts. Call an attorney for more advice.
Is Bankruptcy a Good Thing?
While the thought itself is unpleasant to some, filing for bankruptcy brings enormous relief. Filing with a Cheap Bankruptcy Lawyer In Tacoma WA can make the experience more pleasant. No one wants to file for bankruptcy, but it’s better than dealing with lawsuits, letters, and collection calls. If someone is going through a tough time because of debt, call a bankruptcy attorney today.
