Bankruptcy

Bankruptcy as a Debt Relief Strategy

When faced with the stress of debt, the idea of bankruptcy can be tempting. This may seem like your only option, especially if you are facing foreclosure or your creditors are threatening to garnish your wages or sue you.

While Bankruptcy should be considered a drastic measure and only used as a last resort, Full Circle agrees that it may present the best solution for your debt situation. In the most dire debt situations, bankruptcy does provide advantages such as the following:

Chapter 7 Bankruptcy – What You Need to Know

Under Chapter 7 bankruptcy, qualifying debts can be discharged, freeing you from making payments. To qualify for Chapter 7 bankruptcy, however, you must undergo a "means test," where the bankruptcy court will assess your ability to pay back your debts. This assessment is based on your outstanding debts and your earnings. You may qualify for Chapter 7 bankruptcy if you earn less than the average for your state and if you cannot feasibly pay a minimum monthly payment.

Upon qualifying for Chapter 7 bankruptcy, you will be required to liquidate all non-exempt assets to pay back your creditors. Examples of exempt assets are: your home, car, tools, work equipment and other items of personal property. Items that are not protected under law must be liquidated.

While Chapter 7 bankruptcy can remove unsecured debt, not all debts can be resolved. Chapter 7 bankruptcy usually eliminates debts such as:

Understanding Chapter 13 Bankruptcy

If you do not qualify for Chapter 7 bankruptcy, Chapter 13 bankruptcy may be an alternate debt relief option for you. Under Chapter 13 bankruptcy, your debts are not discharged; instead, your debts are restructured and consolidated so you make affordable monthly payments to a court-appointed trustee, generally for three to five years. The amount you pay is determined by subtracting your living expenses from your income. If you earn above-average wages for your state and are financially able to make monthly payments against your debt, Chapter 13 bankruptcy may be your only bankruptcy option.

If you are simply looking to stop collections, halt pending legal actions against you and restructure your debts so your monthly payments are more affordable, Chapter 13 bankruptcy would stand as a good option for you to pursue. Chapter 13 is an attractive choice especially if you have experience a short-term financial problem(s) as a result of illness, unexpected expenses or job loss, to name a few examples.

Learn More about Your Bankruptcy Options

If you have been thinking about filing for bankruptcy, Full Circle would be happy to help match you with a local, trusted bankruptcy attorney in your state for a free bankruptcy consultation. Our team can also help you assess your financial situation to see if other debt relief options would be better suited to help you resolve your debt. For your free consultation, please call us today at 1-866-677-0788.