There are two main categories of personal bankruptcy, Chapter 7 and Chapter 13. While a bankruptcy lawyer can be useful in both instances to preserve your assets and alleviate the profound stress of being pursued by debt collectors, there is a key difference between Chapter 7 and Chapter 13 bankruptcy:
Chapter 13 debtors have property assets they can liquidate, while Chapter 7 debtors often epitomize the phrase “nothing but the clothes on your back.” If you are considering filing for Chapter 7 bankruptcy in the Ozark area, read on to educate yourself about the process, the advantages and the disadvantages.
Who files for Chapter 7 bankruptcy?
Those who file for Chapter 7 bankruptcy are overwhelmingly low-income or burdened by illness in medical bills. According to a 2011 study, around 60% of all those who filed had incomes of less than $30,000 per year. A total of 62% of all bankruptcy cases were related to illness or catastrophic medical bills.
How to make the choice to file for bankruptcy
It is important to first consider the kind of debt you have before moving forward. Some debt, such as student loans, cannot be discharged through bankruptcy. Those who should file for bankruptcy have incredible debts that they have no hope of paying back. If you decide to work to discharge these debts, you must sell any “non-exempt assets” and put the income from this toward your debt in order to get a fresh start. Check laws in Arkansas or your state, or consult with a lawyer to find our which of your assets will be protected during bankruptcy.
Hope is not lost
With the help of an attorney, 95% of Chapter 7 bankruptcy claims are successful in discharging the debt of the claimant. While the cost of hiring an attorney may seem high upfront (most Chapter 7 bankruptcy cases cost between $1,500 and $3,000) the amount of debt discharged in credit card debt and other debt is typically much higher.