If you are in a position such that you are considering bankruptcy, then it is very important that you consider all of your options very carefully. Making the wrong decision can make a bad situation even worse. To help you out, here are some things that you should consider before making a commitment.
Could you pay back your debts eventually?
The best option for debt relief will almost always be a repayment plan over several years. Ideally, you want to come to an agreement with your debtors that allows you to pay off your debts in a few years. If you are unable to come to an agreement with your debtors directly and use a court to facilitate this process, it becomes something known as a Chapter 13 Bankruptcy.
The general gist of a Chapter 13 is that the court will appoint a trustee to oversee your specific case. This trustee will evaluate your means to pay back your debts and help create a regimented plan for eliminating your debt. The job of the trustee is to act as a middleman between you and your creditors, collecting monthly or bimonthly payments from you and giving the proceeds to your creditors.
However, in order to undertake a Chapter 13, you need to prove that you will have sustainable, reliable income over the next several years. If you cannot prove that you will be making sufficient money, why should your creditors believe that you can pay them back from those wages?
What are your assets worth?
If you have no real means of paying your debt with future income, then you might need to sell off your assets. Unlike repayment, you probably don't want to undergo this process on your own. If you sell the assets yourself and still end up in debt, then you will be in a pretty bleak situation. On the other hand, if you file for Chapter 7 Bankruptcy, then your debts might be mitigated even if you don't have enough assets to cover the entire debt.
Chapter 7 Bankruptcy is also commonly referred to as liquidation. Just like in a Chapter 13, the court will appoint a trustee to oversee your bankruptcy case. In a Chapter 7, the job of the trustee is to determine exactly how much your combined assets are, to sell those assets, and then to use the proceeds to pay your creditors and the government.
Of course, you will be left with some assets. You will likely be allowed to keep a car and some money for emergencies, food, and housing. For more information and assistance, talk to a lawyer like Julie A Philippi Attorney at Law.
Share27 August 2015
When I was a child, I regularly visited a local department store. At this lovely business establishment, one could purchase many items including clothing, shoes, and even hotdogs. Sadly, due to competition and other factors, the store closed its doors for the last time several years ago. If the owners of the store had considered bankruptcy options, they might still be meeting customers’ needs today. On this blog, you will learn how to resurrect your business with available bankruptcy alternatives. Regardless of whether you choose to liquidate your assets or reorganize your entity, the opportunity to remain in operation might be an option for you.