People can find themselves facing what seems to be insurmountable financial difficulties. In the best case scenario, it is possible to work out arrangements with creditors and eventually pay off the debt. Others are not so lucky and see no way out. For those in the latter category, talking with a bankruptcy attorney is the right thing to do. Here are some questions to ask during that first consultation.
Who Is Eligible for Bankruptcy?
As the bankruptcy attorney will explain, not everyone can receive protection from the court or have debts discharged. For any type of personal bankruptcy action, the client must meet the standards set by the court. People who do not have sufficient financial resources to honor their debt are generally good candidates for some type of bankruptcy protection.
Will Bankruptcy Discharge All Types of Debt?
While unsecured debt can be discharged through a chapter 7 bankruptcy, there are other obligations that must be paid in full. Those are classed as priority debts, which include income taxes, student loans, and back child support payments. While there are instances in which income taxes can be discharged, the criteria the debtor must meet is very strict. More often, the attorney will recommend clients with priority debts to consider filing for a chapter 13.
What Is the Difference Between a Chapter 7 and a Chapter 13 Bankruptcy?
A chapter 7 petition is for clients with no hope of ever being able to pay off their debts. Assuming all their debts qualify under the current laws, it is possible for the court to liquidate any assets that are considered eligible, distribute those funds to the creditors, and then discharge the remaining debt. This approach allows the client to be free of debt in a matter of months.
A chapter 13 bankruptcy is for people with debts that cannot be discharged in a chapter 7. Essentially a court-managed repayment plan, the debtor makes monthly payments over a period of three to five years. Priority debts are settled first, then the unsecured debt is addressed. If at the end of the bankruptcy period there are any outstanding balances on unsecured debts, they are discharged.
For anyone who thinks bankruptcy may be the only thing to do, visit Stlbankruptcyfirm.com today and arrange for a consultation. With legal counsel, it is possible to make the right decision.