When is it Time to File for Bankruptcy and What are my Options?
Bankruptcy is a scary word and a terrifying place to find yourself in. Student loans, credit card debt, tax debt and child support can be the downfall to missed payments. If you find yourself with an extreme amount of debt, now might be the time to ask for help and consider filing for bankruptcy. With a skilled personal bankruptcy attorney and armed with the right information, filing for bankruptcy could be the fresh start you desire. That’s why the Bankruptcy division of Nikolaus & Hohenadel, LLP is ready to help you figure out whether bankruptcy makes sense, or if there are other alternatives. Our goal is to help you get back on track with your life.
So when is it the right time to consider bankruptcy?
- Do you only make minimum payments on your credit cards?
- Are bill collectors calling you?
- Does the thought of sorting out your finances make you feel scared, or out of control?
- Do you use credit cards to pay for necessities?
- Are you considering debt consolidation?
- Are you unsure how much you actually owe?
If you answered yes to two or more of the questions above, you should give your financial situation a little more thought. Bankruptcy should be considered when you owe more than what you can afford to pay.
Chapter 7 Bankruptcy
There are lots of reasons people file for Chapter 7 bankruptcy – the most common type of bankruptcy that is often used to handle excessive credit card debt, medical bills, and other unsecured debts. Chapter 7 is sometimes referred to as a “straight bankruptcy” or “liquidating bankruptcy”. In this form of bankruptcy, a bankruptcy trustee reviews your listed assets to determine whether your assets are considered exempt. In Pennsylvania, an individual can choose the Pennsylvania or federal exemptions. Depending on the assets an individual may have, that individual may be able to exempt all of his or her assets, and then receive a discharge of his or her debts. However, any nonexempt assets would be liquidated by the bankruptcy trustee and then distributed to creditors, such as banks and credit card companies.
For many people, Chapter 7 offers a quick, fresh start to get back on track of their finances. However, it’s not the best solution for everyone. A careful examination of an individual’s assets, creditors, and income must be reviewed to make that determination.
Chapter 13 Bankruptcy
For people who have property they want to keep, filing a Chapter 13 bankruptcy may be the better choice.
Chapter 13 is often used when someone is facing a foreclosure on their home and they need an opportunity to get back on track through monthly payments. A Chapter 13 bankruptcy is also known as a “reorganization bankruptcy,” which enables people to pay off their debts over a period of three to five years depending on their income, the amount of debt, and how much can be repaid.
However, bankruptcy is not always the best option and we here at Nikolaus & Hohenadel, LLP try to find ways for you to avoid filing bankruptcy. Sometimes it is possible to reach an agreement with your creditors without having to pay the full debt owed. If you do not want to file for bankruptcy or filing for bankruptcy is not a good choice given your circumstances, we will be there to help you in negotiating with your creditors.
Nikolaus & Hohenadel, LLP has five convenient offices located in Lancaster, Columbia, Elizabethtown, Strasburg and Quarryville, Pennsylvania. Contact us today to begin your journey to becoming debt-free.