Pay off debt to avert financial stress
Unmanageable debts can cause anxiety and financial stress. You can file bankruptcy if no other debt relief option is helping you to pay off debt. Filing bankruptcy is not all that bad. However, you have to find out whether filing Chapter 7 bankruptcy or Chapter 13 bankruptcy will yield results.Earlier filing bankruptcy was easier. With the introduction of new federal bankruptcy laws, you have to take a credit counseling session. The credit counselor has to be approved by the fed. Bankruptcy is a federal court proceeding in which you can repay your debts either by selling your assets that you cannot retain or by making payments as per a repayment plan.
Pay off debt by filing Chapter 7 bankruptcy
First of all you have to undergo a Means test if you want to qualify for Chapter 7 bankruptcy. In Means test a comparison is drawn between your income and median income of a similar household in the state in which you live. If your income is less and median income is high, you can file Chapter 7 bankruptcy. If your income is higher than the median income, your bankruptcy attorney may ask you to file Chapter13 instead.It is very important to have a bankruptcy attorney to represent you. There are many legal issues that need to be handled with precision. And it can be best done by a bankruptcy attorney. In Chapter 7, the assets you cannot hold back are sold off so that the proceeds can be used to pay creditors.
State exemptions and federal exemptions
The bankruptcy exemptions that you enjoy may be either federal exemptions or state exemptions. If you are availing state exemptions, you cannot avail federal exemptions at the same time. In order to avail benefits of state exemptions when you file bankruptcy, you must be living in that particular state for at least 2 years. There are a couple of states that don’t allow you to enjoy exemptions of that particular state unless you are a current resident.Repay debts by filing Chapter 13 bankruptcy
In Chapter13 bankruptcy, you pay off debt according to a new repayment schedule. You pay off debt in about 3 years to 5 years. Your income has to be sufficient enough so that you can make payments every month. You don’t have to part with your assets.Whether you are eligible for Chapter 7 bankruptcy or Chapter 13 bankruptcy, your ultimate goal is to pay off debt. Although bankruptcy damages your credit score, you can always improve your credit rating by managing your finances wisely.
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