Options exist for consumers who are drowning in debt. First, creditors may be willing to extend payment deadlines or modify payments. However, it is important to follow through on any agreements to pay. The company can stop cooperating and begin collection proceedings. Likewise, credit counseling services negotiate with creditors. Many of these services are non-profits and there are reduced fees.
What About Second Mortgages?
Many consumers try to refinance a home or take out a second mortgage. Experts advise against making debt to pay debt. In the end, the debtor could lose their home. Talk to a bankruptcy lawyer in Topeka, KS before making any drastic moves. Bankruptcy is a way out of debt that gives the consumer a fresh start. The most common forms of personal bankruptcy are chapters 7 and 13. The lawyer will let you know which plan is best for you.
Chapter 7
Chapter 7 is a liquidation bankruptcy and the filer must pass a means test. Filers must prove that they simply cannot afford to repay creditors; hence, the court assigns a bankruptcy trustee to review the debtor’s assets. Most assets will be sold to pay off debt. However, personal residences are exempt. Bankruptcy laws also allow filers to keep their retirement accounts and a certain portion of the value in life insurance policies. Consumers are only allowed to file chapter 7 every eight years.
Chapter 13
Consumers who work may need a chapter 13 bankruptcy lawyer in Topeka, KS. Individuals with a regular source of income are required to repay debt. The payment is made to the bankruptcy court and will be distributed among creditors. The bankruptcy trustee looks at a filer’s income and assets to determine the monthly payment. Often, it’s too high and the attorney is able to negotiate.
The average lifespan of chapter 13 is five years. The difficulty consumers have is sticking to a strict budget during this time. Most of the family’s disposable income goes to the bankruptcy court. In many instances, the court will convert the bankruptcy to a chapter 7. Consumers must wait two years after a discharge to file a second chapter 13. To get help, visit the website for a bankruptcy lawyer and schedule a consultation.
