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When you’re facing financial challenges, knowing how to respond isn’t always easy. Filing for personal bankruptcy can do wonders for your financial health, but knowing when to file is important to reach a favorable outcome. Working with skilled Cincinnati bankruptcy attorneys can help you decide when and how to file.
What are the benefits of personal bankruptcy?
Personal bankruptcy allows you to eliminate certain debts, giving you the financial freedom to begin anew. This fresh start is the primary reason people choose to move forward with bankruptcy. While the process itself can feel arduous, the end result allows you to move on with your life with more financial stability and a chance to rebuild your credit and savings.
If you’ve fallen behind on your bills, you’ve probably started to receive unpleasant phone calls and letters demanding payment. Collections efforts can become very aggressive, and are often a significant source of stress. Personal bankruptcy puts an immediate end to collections efforts, giving you breathing space while you restructure your financial life.
If your home is in foreclosure, personal bankruptcy will also stop that process from moving forward until the bankruptcy is resolved. This means you’ll have more time to figure out a plan of action if you’d like to keep your home.
For those who’ve been subjected to wage garnishments or lawsuits surrounding debt, personal bankruptcy will also put an end to those efforts. You’ll need to fully resolve all debts as part of your bankruptcy case, but once the process is complete you can move forward with a fresh financial start.
How do I know if personal bankruptcy is right for me?
It’s important to take the time to consider what you’d like to achieve from personal bankruptcy. If you have significant unsecured debt and limited ability to repay those obligations, Chapter 7 bankruptcy might be a good option. This type of bankruptcy results in a discharge of most unsecured debt, meaning the debt is completely eliminated and will never have to be repaid.
Chapter 13 bankruptcy, on the other hand, is often referred to as a reorganization bankruptcy. This option is a good fit if you still have steady income but are saddled with a mix of secured and unsecured debt. While certain debts can be discharged under Chapter 13 bankruptcy, many debts are simply restructured, giving you more time to repay or more favorable terms.
When is the right time to file for personal bankruptcy?
Timing matters when it comes to personal bankruptcy. One reason you might want to delay filing is if your income has recently increased. Bankruptcy courts will take a close look at your income over the past six months. If the court deems your income too high, you won’t be able to file for Chapter 7 bankruptcy, and will need to pursue Chapter 13.
Another reason to consider delaying a bankruptcy filing is when you intend to keep your home and have an opportunity to refinance. While bankruptcy will stop foreclosure efforts, lenders have less motivation to negotiate terms with you once the bankruptcy process begins.
If you’re pursuing a Chapter 7 bankruptcy, think about your current and short-term financial landscape. If you’re anticipating a larger tax refund, filing right before you receive the refund puts it at a risk of loss. However, if you take your refund and use it to purchase necessities, the amount won’t be part of your bankruptcy proceedings.
There’s also the matter of nonexempt assets to think about. Certain assets are subject to loss during Chapter 7 bankruptcy. if you own property like a recreational vehicle, fishing boat, or second car, you may be better off selling that property and using the proceeds as you see fit, rather than filing for bankruptcy and having the money earned from selling the assets go to your creditors.
If you think you’ll be taking on significant new debt in the coming months, it might make sense to postpone filing for personal bankruptcy. An example is a family struggling with unexpected medical expenses. If you know you’ll need surgery, physical therapy, or skilled nursing services, wait until you complete treatment and all of your medical bills come in before you move forward with your bankruptcy filing, so that those debts are encompassed.
How can an attorney help with personal bankruptcy?
Working with Cincinnati bankruptcy attorneys who specialize in this area of legal practice can be very helpful as you move closer to filing for bankruptcy. While personal bankruptcy has numerous benefits, it’s imperative to follow the law closely when filing. Your attorney takes the time to get to know you and your financial needs, then crafts a bankruptcy strategy that with those needs.
You’ll have the guidance and support of your legal team from start to finish. Simply having someone to turn to with questions and concerns can make personal bankruptcy far easier to navigate. At the end of the day, this investment can pay off with more discharged debts, a stronger financial foundation, and peace-of-mind, something that’s hard to put a prince tag on.
