The number of bankruptcy proceedings is on the rise in spite of the numerous changes in bankruptcy laws that make it extremely difficult for people to file. Contrary to the popular belief, bankruptcy filers are not limited to people who mismanage their finances, it also applies to people who have suffered major health crisis or life-changing events, including loss of job or divorce. To a lot of people, filing for bankruptcy is the only available solution to their financial woes. However, the decision will often carry long-term consequences. Here are some important facts you should know about Consumer Bankruptcy.
When to consider bankruptcy
1. You may want to file for bankruptcy if you are having the following issues:
2. You are being threatened with foreclosure.
3. Your unsecured debts are more than your annual gross income.
4. Your wages have garnished to satisfy your outstanding debts.
5. You have already begun to receive collection phone calls or letters.
The types of bankruptcy available to consumers
1. Chapter 7: This is appropriate for individuals and businesses of any size. It is usually the most expedient and easiest method of settling debts. In chapter 7 cases, the state law determines the possessions to be retained by the debtor while allowing the trustee to sell the remaining assets to pay as many of the debts as possible.
2. Chapter 13: This is designed for consumers having regular income while being temporarily unable repay their debts. The said consumer must be willing to pay their debts in installments over a given period. Normally, the bankruptcy courts will only approve a repayment plan that does not exceed five years.
Steps for filing for bankruptcy
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, every person filing for personal bankruptcy is required to acquire a bankruptcy counseling certificate, under which consumers are educated about the bankruptcy process. In addition, consumers are required to get a bankruptcy education certificate after filing for bankruptcy. This education is aimed at helping consumers to refrain from getting into additional and future financial crisis.
Filing for consumer bankruptcy can eliminate many of your debts and provide you with an opportunity to start afresh. However, filing for bankruptcy by yourself can be a daunting task. If you are contemplating filing for Consumer Bankruptcy, contact Hitchcock & Associates, P.C. Go to Tomhitchcock.com for details.