Is Chapter 7 Bankruptcy the Financial Reset You Need?

When the pandemic hit, what seems like a lifetime ago, you thought that the financial stress would be temporary. You canceled your subscriptions and devoted your free time to gig work in an effort to supplement your income until better times returned. Even though COVID infections and people’s efforts to avoid them no longer make news headlines, the financial malaise brought on by the pandemic never subsided; call it financial long COVID. Now you have exhausted almost every option for staying afloat financially. You moved in with your parents, sold your car, maxed out your credit cards, and borrowed a debt consolidation loan, but despite this, you can barely make the minimum payments on your debt payments. The thought of filing for bankruptcy is scary, but it might be the best option available to you. If you are considering filing for chapter 7 bankruptcy protection, contact a Plantation chapter 7 bankruptcy lawyer.

How to Tell If Filing for Bankruptcy Is Right for You

Filing for bankruptcy has its risks. It is a measure of last resort, so how can you tell if your financial circumstances are desperate enough that a bankruptcy filing would bring more relief than harm. These are some signs that filing for bankruptcy might be right for you:

• The outstanding balance on your unsecured debt is greater than or equal to half of your annual income.
• It will take more than five years to pay off your debts, not including your home mortgage and student loans, if you pay only the minimum payments.
• Your income is less than the median for your state.
• You have no disposable income even when you budget for your expenses.
• Your stress about money is harming your health or your relationship with your family.

How Does Chapter 7 Bankruptcy Affect Your Finances?

Chapter 7 bankruptcy is often the closest thing you can get to instant debt relief, but it is not immediate, it is not free, and it lowers your credit score and can even lead to forfeiture of your assets. You might have to wait until your tax refund arrives before you can afford the filing fee, or you might have to borrow it from a friend. The bankruptcy filing remains on your credit report for 10 years. Worst of all, it does not discharge all your debts. Federal student loans and court-ordered debts like child support or criminal fines are not eligible for discharge in bankruptcy court. If you own assets beyond necessities, the bankruptcy court might order you to forfeit them so the court can sell them and pay the proceeds to your creditors.

If Not Chapter 7 Bankruptcy, Then What?

If you have employment income and think that your assets would be at risk if you filed for chapter 7, you can file for chapter 13 bankruptcy. You might even be able to avoid bankruptcy entirely by borrowing a debt consolidation loan.

Work With a Debt Lawyer About Filing for Bankruptcy Protection

A South Florida debt lawyer can help you find debt relief if you are considering filing for bankruptcy.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.

Source:

moneywise.com/managing-money/debt/personal-bankruptcy-filings-are-soaring-this-year