Bankruptcy Law Firms Can Help
In most people’s lives, they will at some point have to consider a bankruptcy law firm and whether or not they may qualify. With the state of our economy, it is easy for finances to get out of control. When you reach a point of no return financially, you should consider how a bankruptcy law firm can help you.
What is bankruptcy law?
Declaring bankruptcy is a legal proceeding in which people who do not have the assets to pay their bills are temporarily or permanently declared free from the hands of creditors and debt collectors. If you cannot meet your financial obligations, bankruptcy exists so that you can be excused from repaying outrageous debts.
What are the types of bankruptcy law?
The most commonly used types of bankruptcy filings for individuals are a liquidation bankruptcy and reorganization bankruptcy. Liquidation bankruptcy (called Chapter 7 bankruptcy) is a state in which some or all of your property will be surrendered in exchange for your exemption from paying off your debts. Reorganization bankruptcy (also known as Chapter 13 bankruptcy) allows you to keep your possessions, but you will be set up with a new payment plan. This plan will legally bind you to pay your bills in installments, even if it is only for a portion of the full amount you actually owe. This option will significantly reduce your debt and allow you more time to pay off what is left of it. There are other types of bankruptcy law outside of these that are reserved for farmers, corporations, and municipalities.
How do I know if I qualify for bankruptcy?
To determine if you qualify for bankruptcy, in most cases, you will take a bankruptcy “means test”. This test will help determine if your income in comparison to your debts is low enough for you to qualify for Chapter 7 bankruptcy. Precautions were taken during the creation of the test that would help prevent people with higher incomes from filing for Chapter 7 bankruptcy. This protects the people who are in dire need of help with their debt. If you fail to meet the qualifications of the means test for Chapter 7 bankruptcy, in most cases you will still be eligible to file for Chapter 13 bankruptcy— a reduction in payment of debts.
Most people who are required to take the means test will be those who have mostly consumer debts. Most people with primarily business debts will qualify for Chapter 7 bankruptcy since these people are less likely to have any leftover disposable income.
This is just a general overview of two popular types of bankruptcy and who can qualify for them. To learn more about a bankruptcy law firm, its importance, and when you should file for bankruptcy, visit our office or contact one of our bankruptcy attorneys for this valuable information. Do not allow your debt to overwhelm you. If you are fortunate enough to qualify for bankruptcy, it can be a viable option to set you on a better financial path.