If your debts are larger than your assets and the stress of having the debt is interfering with your ability to enjoy your life, you might want to consider filing for bankruptcy. When you file for bankruptcy you can legally eliminate your debts and you can get on with your life again. Once you finish a means test you will know whether you qualify for a Chapter 7 or a Chapter 13 bankruptcy, according to cramplawfirm.com.
If your income is low enough, you can file for Chapter 7 bankruptcy which will wipe out all your debt and you won’t have to pay any of it back. If you have a large asset like a lot of equity in a house or a very expensive car, you might have to sell it if the value exceeds your bankruptcy exemption amount.
You get to keep a certain amount of assets and equity in a Chapter 7 bankruptcy and whatever exceeds the amount you can keep you have to sell. If you have a higher income and you have assets that you want to keep, you will want to file a Chapter 13 bankruptcy. With this type of bankruptcy you have to pay a portion of your debt back over a period of several years.
Once you file for bankruptcy, your debtors have to stop harassing you. If a creditor has filed a lawsuit against you, they cannot proceed with the lawsuit either. The means test is very important because if your income is more than the median income of the state you live in, the judge could dismiss your case which will put you back on the hook for all the debt you owe.
You might want to consider hiring a bankruptcy lawyer to make sure that you do everything right. If you try to fill out the paperwork yourself and make a mistake, you could end up delaying the process or you might have to start all over again. When your bankruptcy protection is lifted, the creditors can start calling you and threatening you again. Getting the paperwork done right the first time is crucial.
When you are planning on filing for bankruptcy, you have to start with the means test so you know what type of bankruptcy you are eligible for. Bankruptcy provides you with a legal way to start over and it makes sense if your debt is out of control.