Financial Resource: Beginner Investing to Financial Independence!

The most difficult task of dealing with a financial crisis is to come to terms with the fact that one is in deep trouble and needs help. Since in this situation when the person has decided to file for bankruptcy, half the problem is solved! Before one files for bankruptcy, one has to find an established attorney who can be trusted, and who can work out the complete details of the individual’s financial situation. The attorney will help in deciding to file for the type of bankruptcy. First, one’s income from various sources is taken into consideration. The average monthly income is worked out, which is then compared with the state median. If it is greater than the state median, the debtor is asked to take a means test to check the eligibility to file for Chapter 7 bankruptcy. Generally, if one is not allowed to file for the same, that person automatically becomes eligible for Chapter 13 bankruptcy.

How does Chapter 7 bankruptcy work?

Liquidation is another word for Chapter 7 bankruptcy! A U.S. trustee will analyze the debtor’s non-exempt assets and calculate the amount that can be collected by selling it. The trustee then sells it and distributes the collected amount to the creditors. This type of bankruptcy covers medical bills. Hence one can wipe out most of the unsecured debts with this. But one may not wish to lose property like house or car. Also, if an individual has a regular monthly income, such a person can opt for Chapter 13 bankruptcy.

How does Chapter 13 bankruptcy work?

In this case, the debtor has to have a regular monthly income and the unsecured debt is below a certain limit, Chapter 13 bankruptcy offers a prepayment plan of whole or part of the debt, over 3 to 5 years. The main advantage is one can keep the foreclosure from affecting the property. Also, as the repayment plan is spread over a longer time period, this in turn reduces the total payments. In fact, it acts like a consolidation plan, wherein the debtor pays the trustee his monthly payments, who then distributes it to the creditors. Don’t wait too long thinking! We can provide the best bankruptcy lawyers who can help such individuals! Contact us to get further details and an analysis that will help debtors decide which path to choose. Making this plan work is what is more important. One should abstain from taking more credit and clear off the existing ones regularly. Make a fresh start and learn from past mistakes.

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