If I’m in Debt, Do I Have to File for Bankruptcy?

Review These Tips to Determine if Bankruptcy is Right for You

woman in debtIn the worst of financial times, one way to deal with mounting debts is to consider bankruptcy relief. 

There is no minimum amount of debt required to be eligible for bankruptcy. But there are conditions that you must consider that help determines if bankruptcy is right for you. If you are considering bankruptcy, it’s a good idea to consult with an Alabama bankruptcy lawyer to guide you through the process.

First, let’s review the different types of bankruptcy. Chapter 7 bankruptcy is a process used to walk away from some or all of your debt. Chapter 13 restructures some or all of your debt into a repayment plan that allows you to keep assets like your home.

Most people think of Chapter 7 when referring to bankruptcy. Their debt has become overwhelming, they’ve fallen behind with creditors, and they see no end in sight to collections for unpaid bills. There are a few things to consider when deciding if Chapter 7 bankruptcy is the right choice for you. Typically, it depends on your ability to pay your debts outside of bankruptcy, whether your creditors are willing to work with you and whether you have the type of debt that can be eliminated, like taxes, child support or a student loan. Those debts don’t go away with Chapter 7 bankruptcy.

There are qualifications that must be met to determine bankruptcy chapter 7 Mobile AL eligibility. In southwest Alabama, you can consult the Loris Law Firm as a bankruptcy attorney Baldwin County for help to determine qualifications. Some conditions to meet include whether your last six months of income is below the state’s median income and whether your debts are considered the kind you can have dismissed, or dischargeable.

It is possible bankruptcy is not the right option for you. Debt consolidation is one option, as is developing a payment plan with creditors. In some cases, you may have access to credit that allows you to secure one loan to cover all of your outstanding debts. If you still have decent credit and can access a loan of this type, like a home equity loan, you can use the money to pay off the pending debts and just make one payment to one creditor.

But if you don’t have that ability, there is another option for debt consolidation in Mobile AL. Consider a reputable credit counseling agency that can help you assess whether you can pay your debts under a debt management program. But choose your counseling agency wisely. Some businesses charge questionable fees for unreliable outcomes. You are better off tapping an approved agency for Mobile Alabama debt consolidation that is recognized by the U.S. Trustee website.

There are times, however, when the debts are too great, and you will need more help than just a consolidation program managed by a counseling agency. It’s possible that Chapter 13 could be a better option. Remember, this relief allows you to keep assets like your home while you reorganize your debts and arrange a payment plan through the court, typically ranging from three to five years. There are some debt restrictions to consider: You can’t have more than $1,257,850 in secured debt, such as a home or a car, or $419,275 in unsecured debt, such as credit cards. This is a useful option for those debts that cannot be discharged, but new payment terms can be arranged. There are AL Mobile attorneys who can help manage this process for you, such as the Loris Law Firm.

Bankruptcy is a big step to take, and one that should not be taken casually. That’s why consulting with a lawyer is so important to understand your options and the consequences of moving forward with bankruptcy. A trained Mobile bankruptcy attorney at Loris Law Firm can help you make the best decision for you and your future.