Bankruptcy is never an easy consideration, but it may be necessary if you’re facing considerable financial difficulty. Especially in the current economic climate, you may have faced job loss or other difficulties and now, you have a mountain of credit card debt or medical debt that you simply see no way out of. Although it is not advised as a first course of action, bankruptcy can give you the fresh start you need if you are never going to resolve the debt you now face. Before you take that course of action, though, make sure you consult Tacoma bankruptcy attorneys to help you navigate the process successfully.
Chapter 7, or Chapter 13?
One of the first questions Tacoma bankruptcy lawyers will help you answer is which type of bankruptcy you should file for. Chapter 7 is the one that’s most often used by consumers. With Chapter 7, you are excused from all debts after proceedings are complete, with the exception of certain kinds of debt like student loans.
There are some caveats with Chapter 7 bankruptcy, though. For starters, you have to qualify for it. If you make more than the median income declared for your state for a family of your size, you generally will not be able to file for Chapter 7 bankruptcy. Your Tacoma bankruptcy attorneys will be able to tell you whether or not you can.
You will also give up most of your assets. Everything considered an asset will be liquidated to pay back creditors, with the exception of certain protected assets like retirement accounts. Therefore, you will probably lose your house, savings, and any other assets that can be liquidated and used to pay back creditors. You will also have a black mark on your credit history for about seven years, which will make it difficult or impossible for you to get any type of loan.
There are benefits, though. The biggest is that you get to start with a clean slate. Once the debt is discharged, you don’t owe anybody anything anymore, again with the exception of certain debts like student loans. Your Tacoma bankruptcy attorneys will help you figure out if this is the best course of action for you.
With Chapter 13 bankruptcy, you’re not simply to be excused from your debts. Instead, the court will set you up on a repayment schedule that you will follow for what is usually five years. At the end of those five years, any remaining debt is discharged. You will need to file for Chapter 13 bankruptcy if you make too much or otherwise do not qualify for Chapter 7 bankruptcy. Chapter 13 bankruptcy also has benefits as compared to Chapter 7, though, because you can often keep assets like your house and savings. Again, your Tacoma bankruptcy lawyers will help you figure out which is best for you.
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