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It is not uncommon today to find yourself overwhelmed with debt. Consumer credit cards, mortgages, car payments, and high medical bills are just a few of the common expenses that seem to pile up on top of one another, often without warning. When you find yourself in a financial situation where you are having difficulty making even minimum payments on your debts, or about to lose your home due to foreclosure, one option is to file for bankruptcy. While this is an intimidating process with legal ramifications, contacting a lawyer to learn how to file for bankruptcy in Memphis and come out the other side in a better financial position may be what you need to get a new start. What does it mean to file for bankruptcy? There are several types of bankruptcy, each defined under a chapter. Chapter 7 bankruptcies involve liquidating everything, whereas chapter 13 bankruptcies involve setting up a payment plan to satisfy creditors. A knowledgeable bankruptcy lawyer can help you determine what type of bankruptcy is best for your specific situation. If you have a regular income, a chapter 13 bankruptcy plan might be best. What are the benefits of filing for bankruptcy? A chapter 13 bankruptcy can also be called a wage earners plan because it specifically benefits those individuals who make a regular income. The level of your income will help determine how long your repayment plan lasts. The total amount you are required to repay will also vary, depending on your situation. One of the biggest benefits to a chapter 13 bankruptcy is that you will get to keep your home. Often, foreclosure proceedings can be halted and back payments on the mortgage included in the repayment plan. You will also be able to reschedule other loans that are secured, making the payments smaller. A secured loan is an amount of money that was borrowed to pay for a specific item, where the bank can physically reposess the item if you default (or stop paying) on the loan. An unsecured loan is one that pays for something that cannot be physically repossessed. A car loan is an example of a secured loan and a student loan is an example of an unsecured loan, where the bank can take the car back but cannot take back an education. You will also see an end to the phone calls and letters from your creditors because the monthly payment you make as a part of the bankruptcy agreement will be to a third party who disperses the appropriate loan payment monies to each lender in your stead. In this way, the chapter 13 bankruptcy acts similar to a consolidation loan. Do you qualify for chapter 13 bankruptcy? While a lawyer is not required by law, it is a good idea to use a lawyer when filing for bankruptcy because the law is quite complicated. If your unsecured debt equals less than $307,675 and your secured debts total less than $922,975, you should qualify. These numbers do change at times, so a lawyer can tell you whether these numbers are still up to date. There are certain situations in which you are not allowed to legally file for bankruptcy, including some reasons that a previous bankruptcy petition may have been recently dismissed. Also, if you have recently received credit counseling from an approved agency, you may be ineligible to file. If you feel that you are underwater with your debts, picking and choosing which bills to pay each month, or about to lose your home due to your inability to make payments, it is important to know that there are options available to you. Contact a lawyer near you to find out how to file for bankruptcy in Memphis.
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