All it takes is a month or two of late payments for finances to get out of control. If a payment is late one time, the account incurs a late fee. This grows the balance. If the late fee causes the balance to exceed the credit limit, an over-limit fee results. This can start a chain reaction that is very difficult to stop without an increase in your income or some kind of windfall. In turn, late payments affect your credit score.
If this sounds like something you have gone through, you know that there is not room for payments to be missed. Unfortunately, most missed payments cannot be helped because they are due to changes in the financial situation. This can start a downward spiral, which triggers a need for help through debt settlement or bankruptcy.
Chapter 7 Bankruptcy
When bankruptcy is the choice, Chapter 7 is one type you will be presented with. The means test that your Chaska bankruptcy lawyer will conduct will determine if your debt exceeds your income. A review of your assets will also reveal whether or not you have any non-exempt assets that can pay back the debt. Most of these cases are “no asset,” which means assets are typically exempt based on their values.
After you complete a 90 minute credit counseling course with an approved credit counselor, your petition is filed with the court. Approximately 30 days later, there is a meeting of creditors with a court-appointed trustee where creditors can also review assets and ask questions if they wish. Sixty days after that, your bankruptcy will be discharged.
Chapter 13 Bankruptcy
Chapter 13 is for those with incomes that do not qualify them for Chapter 7 or they do not want to lose assets. The process is much the same as Chapter 7 with the difference being the payment plan that you and your bankruptcy attorney establish and present to the court. The court may approve or deny the plan. If approved, your payments can begin. If denied, the plan will need to be reworked. Debts are officially discharged after the payments are complete, but a person may not be prohibited from borrowing during this period when making on-time payments.
Debt settlement can be a viable solution if enough creditors are willing to agree to a settlement. Settlements usually consist of one or more of the following: reduced balance, reduced interest, no interest, fee elimination, and reduced payment. The amount owed to the creditor can be reduced significantly, making the debt easy to manage and pay off. In order for it to work, the creditor must agree to terms that you can afford. If they don’t, then bankruptcy may be the only option. This means that the debt has the possibility of being discharged completely and you being liable for nothing.
Contact A Chaska Bankruptcy Attorney
Bankruptcy is a big decision to make, but it is a decision that can change your life for the better. When debt is to the point you cannot get a hold on it and you do not see a way in which you can get it under control, bankruptcy can be the one solution that allows you to move on with your life. To find out more about how Ross & Associates can help you, call for your free consultation at 952-448-3333.