When It Might Be Time to Consider Bankruptcy
Dealing with a mountain of debt can be an overwhelming situation, one that can keep you up at night. You might be at that point when you find yourself wondering when it is the right time to consider filing for bankruptcy. This article will explain the factors that should be considered before filing bankruptcy and provide insight into how much debt you should be in before choosing to file.
If you are struggling to pay your bills, The Debt Doctors of Missouri can help. Our bankruptcy lawyers in Springfield can explain the advantages and disadvantages of bankruptcy to help you determine whether it is right for you. Call (417) 466-3328 to speak to schedule a free, no-obligation consultation.
Understanding Bankruptcy
Bankruptcy is a legal process designed to give individuals and businesses overwhelmed by debt a fresh financial start. This process involves filing a petition in a bankruptcy court to either discharge certain debts or create a repayment plan.
Bankruptcy can be complex and often requires the guidance of a bankruptcy attorney to navigate the process efficiently and ensure the best outcome for the debtor. There are different types of bankruptcy. However, the three most common are Chapter 7, Chapter 11, and Chapter 13.
Types of Bankruptcy in Missouri
Individuals and businesses in Missouri typically file under one of the three following types of bankruptcy:
Chapter 7
- Also known as "liquidation" bankruptcy
- Involves the sale of non-exempt assets to pay off debt
- Remaining debt is typically discharged, giving individuals a fresh financial start
- Ideal for individuals with high amounts of unsecured debt and limited income
Chapter 13
- Involves a court-approved repayment plan to slowly pay off debts over three to five years.
- Individuals can keep their assets while also repaying their debt
- Ideal for those with a regular income who want to catch up on missed car or mortgage payments or other secured debt
Chapter 11
- Designed for businesses and individuals with substantial assets and debts
- Businesses can reorganize their debt while continuing to operate.
- Debtors propose a repayment plan for creditors, which courts must approve
Factors to Consider When Contemplating Bankruptcy
If you are struggling with credit card debt, medical bills, or other unsecured debts that have become unmanageable, bankruptcy might be an option. However, it is not just about the amount of debt you have, but also the type of debt and your ability to repay it. The following are important factors to consider when exploring the possibility of bankruptcy.
Income vs. Debt Ratio
Your income plays a significant role in determining whether you should file for bankruptcy. If you owe more than you make, which makes it impossible to meet your financial obligations, bankruptcy might be a viable solution.
Unsecured Debt
While there is no set amount of debt that qualifies you for bankruptcy, the nature of your debt should be considered. If your unsecured debts, such as credit cards or medical expenses, exceed the amount you can reasonably repay, bankruptcy may be the best option.
Your Ability to Make Payments
If you are struggling to make even the minimum payment on your debts, and the situation seems to be worsening, it is a good indicator that your financial challenges may be best resolved through the bankruptcy process.
The Threat of Legal Action
If you are receiving constant calls from creditors or feel you are under the threat of legal action, such as foreclosure or wage garnishment, your financial situation has reached a critical point. Bankruptcy may be the answer to providing relief and stopping these actions.
The Impact on Your Daily Life
Consider how your debt is affecting your life. If you cannot cover your basic living expenses, are sacrificing your basic necessities, or are living in constant stress because of your debt, it is likely time to explore your bankruptcy options.
Speak with a Bankruptcy Lawyer in Springfield, Missouri, for FREE
Deciding whether to file for bankruptcy is not easy. The choice will depend on many factors and your particular financial situation. Seeking expert advice from a bankruptcy attorney is key to understanding your legal options and making an informed decision. Be sure to keep in mind that bankruptcy is not a one-size-fits-all solution, and exploring alternative solutions may also be beneficial.
To learn more about your debt resolution options, contact the Debt Doctors of Missouri. Our experienced and dedicated team of bankruptcy lawyers will explain your options, help you regain control of your finances, and put you on a path to a more secure financial future. Schedule a free consultation by contacting us online or calling (417) 466-3328.
