Two Most Common Types of Bankruptcy
Everyone falls on hard financial times at one point or another in their lives. Most often, you’re able to pull yourself out of debt. Other times, you’re forced to make some tough decisions about your future. If you’re in a financial crisis, bankruptcy is designed to provide debt relief to those who can no longer stay solvent, and it could be your best option.
Here are two types of bankruptcy:
Chapter 7—Most folks in Arkansas would prefer to file Chapter 7 bankruptcy, because it eliminates most unpaid debt. However, it also requires that you liquidate assets to pay off a portion of the debt, which makes it hard to keep your home if it is being foreclosed on. Those who file for Chapter 7 must pass a means test, which is designed to exclude those with high incomes or a wealth of assets—essentially those who could pay their debts without filing.
Chapter 13—If you don’t qualify for Chapter 7, you may consider Chapter 13. In Chapter 13, instead of debts being eliminated, they’re restructured so that a reasonable payment plan can aid you in paying the debts off. In most cases, filing Chapter 13 bankruptcy will cease any foreclosure process that is currently in the works, which is why you may consider it if you want to keep your home.
Filing for bankruptcy can be complex and complicated. That’s why you need an experienced Arkansas bankruptcy lawyer on your side. Give us a call today for a free consultation. We’ll evaluate your financial situation and advise you of your options so you can start putting this crisis behind you.