Feeling overwhelmed by your debts can be crushing. Anxiety about monthly payments, household expenses, persistent debt collectors, and ever-accumulating interest is enough to make anyone feel confused and even helpless. Misconceptions around filing for bankruptcy tend to paint the process in a seriously negative light; however, if you’re truly struggling, bankruptcy can provide you with an opportunity for a fresh start. How do you know when it’s time to take the leap and file? Here are a few of the telltale concerns that allow my clients and I to reach a consensus on a bankruptcy filing decision:
Your Debt Versus Your Income and Assets
One of the least involved methods of calculating whether it may behoove you to file for bankruptcy is to take a look at your current income. If the total of your existing debts adds up to more than half your existing income—and you know your income will remain constant—it’s unlikely you’ll be able to pay off your debt.
Keep in mind: Though Chapter 7 bankruptcy can resolve your overwhelming debt, it will not relieve you of student loan debt if you are still paying on your student loans. Typically, for those without sufficient income to repay existing debt, Chapter 13 bankruptcy is not a suitable option.
Your Debt is Unmanageable
If you have frequent missed payments or creditors are hounding you to resolve closed accounts that you simply cannot afford to pay, it may be time to find a way out. If you know your current income will not support the immediate resolution of your debts, but you also believe that a payment plan could make repayment manageable, filing for Chapter 13 may be an option.
Chapter 13 bankruptcy allows you to avoid asset liquidation by issuing a three- to five-year repayment schedule. Under this debt resolution agreement, you must allocate all of your disposable income toward the repayment of your debts. You’ll be under the supervision of a court-appointed trustee who will manage and distribute your payments.
Your Wages Are Being Garnished
If your debt is so substantial that creditors are garnishing your wages, it may be time to consider filing for bankruptcy. Having your wages garnished can hinder your ability to pay for life and household necessities, which will only further your debt. Depending on your existing income and the amount of debt you have, you may be eligible for either Chapter 7 or Chapter 13 bankruptcy. A bankruptcy lawyer will guide you through the qualification process and help you determine which filing option best suits your needs.
Considering Filing for Bankruptcy? Contact Ron Lundquist
If you’ve been considering filing for bankruptcy and would like to learn more about your options at this critical time, contact Ron Lundquist, Attorney at Law. Our firm will provide you with the information and guidance you require to make the best decision for your needs and situation. We provide both Chapter 7 and Chapter 13 bankruptcy services, as well as business bankruptcy and foreclosure assistance. To learn more or to schedule your complimentary, no-obligation consultation with our Minneapolis bankruptcy firm, contact us today at 651-454-0007. You can also reach out to us by submitting your information on our contact page.