The recent trying economic times have affected Georgian families all across the state, with many people finding it more and more difficult to keep up with their monthly bills and expenses. Several people have contacted our office to discuss whether filing for bankruptcy would be a good option for them to use in order to get their financial house in order. While every individual case is different, there are a number of key factors that everybody should consider when making the decision to file or not file for bankruptcy.
Factor 1 – Are You Eligible for Bankruptcy?
Not everyone is eligible to file for bankruptcy. In general, there are two types of bankruptcies that an individual may file – Chapter 7 and Chapter 13. Chapter 7 has much more restrictive income requirements than Chapter 13, and many people are surprised to learn that they actually make too much money to file for Chapter 7! Filing for the wrong type of bankruptcy can be a costly and time-consuming mistake, so contact our office to speak with an experienced attorney before submitting any paperwork to the court.
Factor 2 – Are Your Debts Dischargeable in Bankruptcy?
Another aspect of the bankruptcy process that surprises many people is that the process does not wipe out all debts. There are several types of debts that bankruptcy cannot touch including child support, alimony, certain types of tax payments, and student loans. If your debt is comprised primarily of these types of obligations (as opposed to credit card debt or a mortgage) then bankruptcy is likely not going to help you get your head above water, but a chapter 13 bankruptcy may still offer some relief.
Factor 3 – Will Your Bankruptcy Leave Your Cosigners On The Hook?
Many Georgians required the help of a friend or relative to secure loans – most frequently student loans. If a loved one co-signed your loan, that means the loved one promised to pay the lending institution if you defaulted on the loan obligation. Depending on the type of bankruptcy you file, doing so may leave your cosigner on the hook for any of the debt that you did not pay.
Factor 4 – Would Filing for Bankruptcy Affect My Family?
Married couples are not required to jointly file for bankruptcy. One spouse may file without affecting the financial state or credit score of the other spouse. However, depending on how the couple owns its property (whether individually or jointly) the decision to file for bankruptcy may still affect the non-filing spouse. Therefore, not only are people encouraged to speak to an attorney before starting the bankruptcy process, but they are also highly encouraged to discuss these matters with their spouse as well.
Here are some answers to common questions asked about how filing for bankruptcy will affect the children.
Factor 5 – Do You Have Any Alternatives to Bankruptcy?
Filing for bankruptcy is a very serious undertaking. Bankruptcy is an official legal procedure that could have long-lasting consequences. Therefore, it is important to consider whether you have any alternative solutions available. The most common alternative solution is debt renegotiation. Since during the bankruptcy process some creditors receive very little to none of the payments that are due to them, many creditors are willing to renegotiate loan terms, make alternative payment plans, and sometimes even accept less than what is owed to them. However, please note that debt renegotiation is not always successful and it is helpful to work with an attorney who can help protect your interests during this process.
If you are considering filing for bankruptcy and have further questions about the process, contact our office today to speak to one of our attorneys. We look forward to working with you!