Bankruptcy is more than just a disturbing word. It is a legal process where you gain protection from your creditors by proving insolvency.
Bankruptcy can be embarrassing since it is a public record that announces your filing to the general public. It can also have substantial costs, which can rise dramatically the more complicated your case is.
Despite the negative aspects that go along with bankruptcy, sometimes it is an appropriate resolution to a hopeless financial situation. Understanding the process can help you decide whether to seek legal counsel or to attempt to avoid bankruptcy by pursuing other means.
Alternatives to Bankruptcy
Bankruptcy should generally be viewed as a last resort. See what options might be a better solution to dealing with debt when you have faced financial hardship.
Chapter 7 Bankruptcy Process
A Chapter 7 bankruptcy filing often entails more than just liquidating your assets. Certain property might be considered exempt by the court. Likewise, some debts may not be cancelled by a Chapter 7 filing.
The Means Test for Bankruptcy
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) changed eligibility requirements for Chapter 7 bankruptcy. It establishes a means test for which your income could impact your filing options.
Chapter 13 Bankruptcy Process
A bankruptcy filing under Chapter 13 can be more complicated than Chapter 7. This process can cost more as you repay your debt over a number of years.
Pros and Cons of Chapter 13 Bankruptcy
Filing for bankruptcy protection under Chapter 13 can offer relief from creditors. There are certain advantages as well as disadvantages to filing under Chapter 13 as opposed to a Chapter 7 filing. Consider the pros and cons carefully during the discussions with your attorney.
Bankruptcy can be a complicated legal process. While there is no requirement to obtain an attorney in order to file, most debtors find that it is preferable to obtain legal counsel that is familiar with the complexities of bankruptcy.
A Chapter 7 filing can sometimes be as low as $1,000, whereas a Chapter 13 plan could easily top $2,500. If your household is considered low income, then you may try contacting your local Legal Services Corporation office to see if you qualify for free legal assistance.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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