Figuring out when to file for bankruptcy
Many people in New York may be struggling with debt and unaware of their options. Bankruptcy is the right choice for some while others might have various possible solutions that they can pursue first. When trying to figure out a way to pay off debts, people should first evaluate their budgets.
Those who have a regular income can assess how much money they are spending on essentials and how much money they have to use on making debt payments. When formulating a budget, some people see that they can eliminate spending for unnecessary items and use the savings to paying off debts instead. If there is no room in a budget for making debt payments, then one might want to consider filing for bankruptcy. Bankruptcy could also be an option if high interest rates and fees will accumulate while it takes several years to pay off a debt.
A thorough analysis of income, expenses, assets and liabilities is needed to understand what kind of bankruptcy one should file for. Chapter 7 or Chapter 13 bankruptcy are two options frequently used by individuals, and those who qualify for both options must then see what would work best for the situation. Under Chapter 7, a trustee liquidates a debtor’s non-exempt assets to pay creditors, whereas Chapter 13 gives those with a steady income the opportunity to reorganize their debts through a court-approved payment plan.
People who are considering bankruptcy may need to consult an attorney who can help determine the best course of action. The attorney can explain what assets could be retained and what may be sold when filing for Chapter 7 bankruptcy. An attorney could also assist a client in preparing a Chapter 13 repayment plan and submitting it to the court for its approval.