The benefits of filing for bankruptcy are undeniable. At the end of a successful bankruptcy, most if not all secured or unsecured debts will be eliminated. However, filing for bankruptcy is still much like pulling the ejector seat on a fighter jet. With the average bankruptcy staying on an individual’s credit report for 10 years, knowing when should you file bankruptcy will be the most important question of this process. Getting the right answer to that question can help you understand whether or not bankruptcy is the best option for you.
Statistics show that bankruptcy filings are working. There were 97,287 fillings for bankruptcy in July 2012 alone, but that number is actually part of a steady decline as people learn to manage money more effectively. A trustworthy answer to, when should you file bankruptcy, can get you started on a healthy road to recovery. Although consultation with an attorney will always provide the most clear cut answers, here are some facts to help you get started.
The road to recovery begins with knowing your options. Although chapter 7 and chapter 13 bankruptcy laws both provide individual relief the affects do differ from those endured when filing chapter 7 bankruptcy.
It is important to know the no bankruptcy filing will help directly with recurrent monthly bills such as student loans, utilities and mortgages. Filing for bankruptcy does not on its own preserve the ownership of a home. Home owners are still expected to make monthly payments if they do not meet the means based relief that is offered for avoiding home foreclosure.
In the United States, chapter 7 is the most common bankruptcy option. This form of bankruptcy allows for the straight liquidation of assets associated to debts. this options requires filers to pass a means based test. Scoring above the ceiling for the test may position you out of the grasp of chapter 7 bankruptcy. The second most popular of bankruptcy, chapter 13 may be a fit alternative. Chapter 13 bankruptcy is a less common option than chapter 7 filings. However, chapter 13 bankruptcy still provides the relief that many families need in order to get out from beneath a heavy burden of debt. Chapter 13 allows participants to repay a portion if no all debts based on a readjusted payment plan, allowing individuals the room they need to pay off their debts successfully.
Chapter 11 bankruptcy codes all for a reorganization of debt that is much like that experienced when filing for chapter 13. The primary difference is that chapter 11 is the best bet for businesses and sole proprietorship. While an individual may file for chapter 11 bankruptcy under the right circumstances, these cases are rare.
Finally, as you look into filing for bankruptcy, there will be many statistics to read. Such numbers may include facts like California’s bankruptcy rate the first quarter of 2012 was estimated at 52,464 individuals. However, the best solutions will still be found in a reliable answer to, “when should you file bankruptcy.”
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