No one likes the idea of filing for bankruptcy. It is not unusual for people to put off talking with an attorney until they have tried every other possible solution. The type of personal bankruptcy to file will depend on several factors. Here are some signs that it is time to think about a chapter 7 bankruptcy.
No Way to Repay the Debts
One sign that a chapter 7 bankruptcy is the most practical move is when the debtor has no way to honor the current obligations. For example, there are few if any assets to liquidate and the income level has dropped to a point that keeping up with the monthly payments is impossible. Assuming that the debtor can pass the means test required by law and the trustee does agree that what little the debtor owns is considered ineligible for sale, it will be possible to discharge the debts in a matter of months.
Financial Difficulties Are Affecting Other Aspects of Life
The combination of worrying about money and attempting to deal with creditors has begun to have an adverse effect on other parts of the debtor’s life. Performance at work is slipping, which is something that could lead to termination. Personal relationships are also strained, owing to the short temper of the debtor. Before those worries can do any permanent damage at home or at work, it makes sense to talk with an attorney.
The Nature of the Debts
Another factor to consider is the type of debt currently owed by the debtor. Some debts are considered a priority and cannot be discharged. Taxes, outside of very specific situations, cannot be discharged in a chapter 7 bankruptcy. Student loans typically cannot be discharged either. When the debtor does have a significant amount of priority debt, the attorney is likely to discuss the merits of a chapter 13 bankruptcy action.
For anyone who is facing the possibility of bankruptcy, visit us today and schedule a consultation. After spending some time looking over the debt and the information about the client’s income, it will be possible to recommend the course of action that will eventually provide that fresh a fresh financial start.
