Most people don’t want to file for bankruptcy, but sometimes, it’s a necessity. Before you begin worrying about losing your assets, though, consider if bankruptcy is truly the right option for you. Ask yourself these questions before calling an attorney.
What Is Your Situation?
Consider your situation before you default to bankruptcy. Inventory your liquid assets, such as retirement funds, real estate, and savings accounts. Next, add up your bills, credit card statements, and other loans to determine how much you owe. If you owe more than the value of your assets, you may be better off declaring bankruptcy.
How Do You Know Which Chapter to File?
There are two common types of bankruptcy: chapter 7 and chapter 13. Chapter 7 is common for people who are unemployed, have large medical bills, are getting divorced, or who used too many credit cards. Known as a “straight bankruptcy,” this option generally takes a few months and requires you to forfeit almost all of your assets, including homes or companies.
Chapter 13 is common for people who have property they need or want to keep, such as a family home or a work vehicle. This is known as a reorganization bankruptcy and allows people to pay off debt over a few years rather than give up their assets. This is best for people who have consistent income and want creditors to stop contacting them directly.
How Will Bankruptcy Impact Your Life?
Before contacting a bankruptcy attorney Howard County MD, it is important to understand how filing will impact your life in the future. A bankruptcy is a public record that may appear in a local newspaper’s legal notices or who may pay to see bankruptcy accounts. It will also lower your credit score further and will remain on your credit report for up to 10 years. Finally, if you have any debt that had a co-signer, such as a loan, the co-signer will be on the hook in some cases.
Most bankruptcy lawyers will provide a free or low-cost evaluation. Consider going this route before you start paperwork that changes your financial future.