Many people struggling with crippling amounts of financial debt, whether it be from home mortgages, credit cards, or car loans, fail to properly assess the option of bankruptcy. Depending on your current financial situation, bankruptcy may be your best option to clear your debt in the most favorable terms.

Here at Labiak Law Group, our dedicated attorneys of law will guide you along every step of the way to reach the goal of financial freedom from burdening debt. We take time to learn about the individual needs of each client and cater a specific strategy accordingly.

What is Bankruptcy?

According to debt.org, bankruptcy is a legal procedure which involves a judge and a court trustee to evaluate the financial means of an individual or business in order to determine whether they are capable of fulfilling their debt obligations.

In some cases, they may decide to discharge the debt obligations of the individual or business once specific terms are met. However, in other cases, the judge may decide to dismiss the claim which doesn’t erase the debt obligation.

A 2016 study performed by the American Bankruptcy Institute, uncovered that nearly 95% percent of chapter 7 bankruptcy cases were ruled in favor of the individual or business. Once the debt obligations are discharged in court, the individual or business in question is no longer legally required to pay their debts.

What are the Common Types of Bankruptcy?

There are many different types of bankruptcies. However, generally speaking, the most common cases of bankruptcy happen to be either Chapter 7 or Chapter 13. The former case occurs around 70% of the time, while the latter occurs only around 30% of the time.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy involves the liquidation of all non-exempt assets such as cash, bank accounts, second home, second car, stock investments, etc., in order to pay off creditors.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, or otherwise known as ‘wage earner’s bankruptcy’, is an alternative for those who do not qualify for chapter 7 due to a high income or aren’t willing to liquidate their non-exempt assets. 

Is Bankruptcy the Right Choice?

Although the prospect of a fresh financial start may seem alluring, bankruptcy is not possible for certain kinds of debt including but not limited to:

  • Alimony or child support
  • Federal student loans, unless you have an extreme hardship
  • Debts or costs associated with bankruptcy filings
  • Some taxes

The specifics can widely vary on the state to state level. Be sure to consult a bankruptcy attorney in your state in order to gauge the best course of action for your individual situation. Keep in mind that declaring bankruptcy does not clear the name of the co-signer for any debt incurred.   

What’s the Difference Between Bankruptcy and Debt Consolidation?

There are two viable alternatives for someone looking to clear themselves of overwhelming debt: Bankruptcy or debt consolidation. As previously mentioned, bankruptcy is a legal proceeding which can help you get a fresh start by eliminating all debt obligations.

In bankruptcy, as it is a legal proceeding, you will know the outcome as long as you follow the law. In debt consolidation, until the outcome actually occurs, the outcome may be uncertain.

Both bankruptcy and debt consolidation will hurt your credit scores.  Bankruptcy is more of a sudden impact down with a faster potential recovery while debt consolidation is a general decline and improvement.

You can do debt consolidation as often as you wish, while you may only receive a bankruptcy discharge every four to eight years depending on the chapter of bankruptcy filed.

How Do I File for Bankruptcy?

Once all other viable measures of debt management have been thoroughly exhausted to no avail, then it might be time to file for bankruptcy. It is required for all applicants to undergo credit counseling from an approved provider within 180 days before filing. This will result in obtaining a certificate of completion which will be necessary in court.   

Next, you will need to compile a detailed financial report including all pertinent assets, debt, income, and expenses. Once you have amassed all the necessary documents, you can file your petition for bankruptcy. Without the assistance of professional legal counsel, you could be at a severe disadvantage in the proceeding court appearances.

What is Bankruptcy Court?

Once your bankruptcy petition has been filled and accepted, you will be appointed a court trustee who will set up a meeting between you and your creditors in order to discuss the particular details about your case.

You must be present at the meeting, although your creditors won’t necessarily be there. At this meeting the court trustee or the creditors might have some questions for you regarding the matter. Your attorney will be present at this meeting 

Get in Contact with a Trusted Bankruptcy Attorney

Bankruptcy can be a lengthy, grueling procedure without the proper legal guidance in your corner. If you or a loved one is going through the process of filing for bankruptcy, don’t go at it alone.

Contact us at Labiak Law Group, our bankruptcy attorneys will fight until all your debt obligations are liberated from your shoulders and you can go back to living a life free from worry or harassment from debt collection agencies.