The pandemic has affected the global economy drastically, putting people in a crucial financial crisis. Governments and citizens are equally affected by the emotional and financial drain, which will take years to get better. As it gets challenging to manage funds and make ends meet, many people consider opting for loans, and those who are not eligible announce themselves as bankrupt. This has led to an increased demand for assistance from a bankruptcy law firm. Multiple businesses also declare themselves bankrupt as the liabilities kept increasing and there was no cash inflow.
If you are also sailing in the same boat and looking for ways out of it, bankruptcy is an option. However, it is not as easy as it sounds. Moreover, the pandemic is not the only issue behind the financial crisis. It can happen due to increased expenses, divorce, or sudden business loss. You would have to move forward, keeping in mind your reason to ensure everything happens in a legit manner. For this, you would need help from a reliable attorney like Murray & Murray LLC. (check Website).
Understanding the Type of Bankruptcy
An important thing to consider is the differences between Chapter 7 and Chapter 13 bankruptcy as those are two types of consumer bankruptcy. Getting it right can prevent headaches from potentially having to convert from a Chapter 13 to Chapter 7 bankruptcy.
Chapter 13 Bankruptcy:
Chapter 13 bankruptcy, also called “reorganization bankruptcy,” is for those who have a steady income and can afford to pay back some of their debts over a three to five-year period. In Chapter 13, a repayment plan is created, which allows the debtor to make affordable payments to creditors while retaining assets such as their home and car. This type of bankruptcy may be a good option for individuals who want to avoid foreclosure or repossession of their property.
Unlike Chapter 7 bankruptcy, Chapter 13 does not require the debtor to sell off assets to pay off creditors. Instead, the debtor works with a bankruptcy trustee to create a repayment plan that will be reviewed and approved by the court. The debtor must make regular payments to the trustee over the three to five-year period, after which most remaining debts are discharged.
One advantage of Chapter 13 bankruptcy is that it stays on the debtor’s credit report for only seven years, making it easier to obtain credit in the future. Additionally, the debtor is allowed to keep their property as long as they continue to make payments on their secured debts, such as their mortgage or car loan.
Chapter 7 Bankruptcy:
Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is designed for individuals with little to no disposable income. It involves selling off non-exempt assets to pay off creditors and discharging most unsecured debts such as credit card debt, medical bills, and personal loans. However, not everyone qualifies for Chapter 7, as the means test takes into account the debtor’s income, expenses, and family size.
In Chapter 7 bankruptcy, a trustee is appointed to review the debtor’s assets and sell off non-exempt property to pay off creditors. The debtor must also attend a meeting with the trustee and creditors to answer questions about their finances. This process usually takes about four to six months, after which most unsecured debts are discharged.
One major disadvantage of Chapter 7 bankruptcy is that it stays on the debtor’s credit report for ten years, making it difficult to obtain credit in the future. Additionally, the debtor may be required to surrender some assets, including their home or car, depending on state exemptions.
Choosing the Right Bankruptcy Option:
Choosing between Chapter 7 and Chapter 13 bankruptcy can be a difficult decision, and it’s important to consult with a bankruptcy attorney to determine which option is right for your financial situation. While Chapter 7 may be a good option for those with little income and few assets, Chapter 13 may be a better choice for those who have a steady income and want to keep their property.
Is Bankruptcy an apt solution?
Before you learn whether it is an apt way to deal with the financial crisis, it is fruitful to know the types of bankruptcies and which one is suited for you. If you’re from Nevada or nearby cities, it is best to contact an experienced Nevada bankruptcy attorney who can educate you about the right kind and file your application accordingly.
. Some of the benefits of opting for this provision are listed below.
Helps in Restructuring
Bankruptcy often gives time and space to restructure your finances and move to normalcy within time. Once you file for it, you wouldn’t have to deal with wages or other finances. There will be enough time and opportunity to plan the restructure. You know your older strategies were not effective enough. So, start from scratch, create a sturdy plan and implement it to come out of the financial crisis.
Fixes the Credit
If you announce bankruptcy, your credit score will get affected. For a while, no lenders will offer you any loans or credit. However, as you are already in a financial crisis, you would have to start from scratch. Thus, you will have an opportunity to build your credit score from the beginning, and eventually, things will work in your favour.
Break from Debt Collectors
The financial crisis and unending calls from debt collectors adversely affect the person’s mental state. So once your attorney helps you file for it, you will get a convenient repayment plan and a break from the debt collectors. Ensure that you hire someone reliable, like Murray & Murray LLC. who can assist you with everything.
There are multiple other benefits that the individual or the business can enjoy if they decide to declare themselves bankrupt. It is essential to opt for an attorney to assist in the entire declaration, document filing, and other legalities involved. Ensure that you hire the best attorney for your assistance, the one with proven expertise and an excellent market reputation. Discuss your situation with them, and rest assured that they will take care of the rest.