How Bad Do Your Finances Have To Be For Bankruptcy?

People thinking about bankruptcy often assume their finances have to be wrecked before they can petition the court for relief. While no one wants to file for bankruptcy, a person doesn't necessarily have to wait until their finances are completely destroyed. Take a look at how you can evaluate your financial situation and decide what to do.

Fast-Track Qualification for Chapter 7 Bankruptcy

The simplest way to assess the possibility of filing is to look at the requirements for quickly qualifying for Chapter 7. If you make less than your state's median income, you almost certainly qualify. You should still assemble your financial documents and talk with a Chapter 7 attorney before filing. However, someone in this situation stands an excellent chance of qualifying and getting their case through the system rapidly.

Other Ways to Qualify

The previous criteria represent only the simplest and fastest way to qualify. You might still be eligible for Chapter 7 bankruptcy if your debt load exceeds your ability to ever pay. A court will want to see evidence, though, showing what your finances are and how severe your debts might be.

Likewise, you may be able to pursue a Chapter 13 bankruptcy. When someone files for Chapter 13, they ask the court to reduce their debt load in exchange for agreeing to a payment plan.

You must prove you can't afford to pay, though, so it's wise to hire a Chapter 13 bankruptcy lawyer. A Chapter 13 attorney can help you collect and present financial information in a way that will help a judge better understand your situation. While a Chapter 13 bankruptcy attorney can't guarantee a court will accept your petition, structuring your case competently may improve your odds.

Paying without a Light at the End of the Tunnel

Many people are tempted to keep paying until they simply can't handle it anymore. Some folks do this out of pride, and others do it because they assume they don't qualify for bankruptcy.

However, you should understand that avoiding bankruptcy could make the problem worse in the long run. If your finances are bad enough to justify even the thought of bankruptcy, the best move may be to get on with it. Otherwise, you might accumulate more debts, interest charges, and service fees. Also, you'll have the headache of dealing with creditors who can be very harassing. By filing for bankruptcy now, you can get your debts under control and start over with a fresh slate.

Contact a local law firm, such as Ozment Law PA, to learn more.