Factors to Consider before Filing for Bankruptcy

Helping You Decide Whether to Seek Protection

You’ve suffered an injury or you have an illness. Maybe you can’t work or you’ve incurred thousands of dollars in medical bills that your insurance company won’t reimburse. You’ve tried to work out agreements with your creditors, but they are unwilling to meet you halfway. Is bankruptcy your next step? What factors should you consider before seeking the services of an experienced bankruptcy lawyer?

What Financial Resources Do You Have?

When filing for protection under the American bankruptcy laws, you may be able to discharge debts under Chapter 7 or you may be limited to restructuring your debt under Chapter 13. That depends on the financial resources available to you. To qualify to “discharge” or permanently wipe out debts, you must demonstrate to the court that you lack the resources to repay your creditors over a 3-to-5-year period. Otherwise, you must renegotiate your debt.

What Types of Debt Do You Have?

Under the bankruptcy laws, certain types of debt may not be discharged under Chapter 7 or may be extremely difficult to discharge. Child support payments cannot be eliminated in a bankruptcy filing, and tax and student loan arrearages are extremely difficult to discharge. If the bulk of your debts is tied up in those types of obligations, you won’t get much benefit from a Chapter 7 proceeding.

Are You Concerned about Keeping Your Property?

When you seek to permanently discharge debt through Chapter 7, you must also be willing to relinquish certain assets to the bankruptcy court for the benefit of your creditors. There are exemptions available for certain amounts and types of property. Nonetheless, if you seek protection under Chapter 7, you will most likely lose some property, whereas, with a Chaptewr 13 reorganization, you typically get to keep all your assets.

What about the Impact on Your Credit Rating?

Your bankruptcy will appear on your credit report. While some potential lenders may view that as a strike against you, many potential creditors will view it as a positive sign, a willingness to take the difficult steps to turn your financial situation around. Of course, you’ll want to be diligent about meeting your financial obligations in the months following your bankruptcy filing, so that there are no further negative reports.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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