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Making the Decision to File Bankruptcy

Posted on Thursday, January 9th, 2014    

Whether you owe a lot of money to creditors or only a little, bankruptcy may be the best answer to your financial problems.  On the other hand, there may be other solutions that are more appropriate for your particular needs.  Amerio Law attorneys can help you decide if you are a good candidate for bankruptcy and, if so, which chapter is most appropriate for you.

Chapter 7 Bankruptcy

Different types of bankruptcy are appropriate for different financial situations.  Chapter 7 or a “liquidation” bankruptcy is usually most appropriate for people with few secured assets and mostly unsecured debt.  If you rent your home and have only credit card debt, for example, a Chapter 7 may be right for you.  However, if you own a home, a car or other valuable assets, you may be better off filing a different type of bankruptcy.

Chapter 7 bankruptcy usually has the advantage of being quicker than other types of bankruptcy.  Most Chapter 7 bankruptcies can be completed in a few months, while other types of bankruptcy may take several years before a discharge can be obtained.

Chapter 13 Bankruptcy

The other popular type of consumer bankruptcy is a Chapter 13.  When you have assets such as a home, a car or other secured property, you may find that a Chapter 13 is more appropriate than a Chapter 7.  In the course of a Chapter 13 bankruptcy, the debtor files a plan to make payments from his or her earnings on a regular basis to a court-appointed trustee.  The trustee takes this money and distributes it to creditors.  This allows the creditors to receive at least some of the money owed to them and usually allows the debtor to retain possession of certain assets.

Of course, no statement regarding bankruptcy is cut and dried.  Some secured assets can be protected in a Chapter 7, and some assets must be surrendered as part of a Chapter 13.  There are also other types of bankruptcy filings that are appropriate for other needs, such as businesses that need to claim protection under bankruptcy law.

Ultimately, a person considering filing should discuss this decision with an attorney who understands bankruptcy and knows how to advise clients on the right type of bankruptcy filing.  Amerio Law attorneys deal with many types of bankruptcies and will meet with you to discuss whether bankruptcy is the right choice for you and, if so, which type of bankruptcy can best meet your needs.

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