There are several reasons why someone may file for bankruptcy. Some common causes include the following:
- Overwhelming debt: When someone is struggling to pay their bills and cannot keep up with their debt payments, they may choose to file for bankruptcy to get relief from their creditors and have their debts discharged.
- Job Loss or Reduced Income: A sudden loss of income can make it difficult for an individual to pay their bills and keep up with their debt payments. Filing for bankruptcy can provide them with relief from their creditors and reorganize their finances.
- Medical Bills: Unexpected medical bills can be a significant financial burden, especially if the individual does not have health insurance or if their insurance does not cover all of their medical expenses. Filing for bankruptcy can provide a way for them to get relief from medical bills and other unsecured debts.
- Divorce: divorce can be a significant financial burden, as the division of assets and debts can leave one or both spouses with substantial debt.
- Foreclosure: Being unable to make mortgage payments can lead to foreclosure. Filing for bankruptcy can provide a way for homeowners to keep their homes by giving them more time to catch up on their mortgage payments.
It’s important to remember that filing for bankruptcy should be a last resort, and exploring other options is always recommended before taking this step. An experienced bankruptcy attorney can help you evaluate your options and determine if bankruptcy is the right choice.
how long does it take to file bankruptcy? The length of time it takes to file bankruptcy can vary depending on the type of bankruptcy you are filing and the specific circumstances of your case.
For Chapter 7 bankruptcy, the process usually takes about 4-6 months from filing the petition with the court until your debts are discharged. This includes the time it takes for the court to appoint a trustee to handle your case, the time it takes for the trustee to sell any non-exempt assets and pay off your creditors, and the time it takes for the court to grant your discharge.
For Chapter 13 bankruptcy, the process can take 3-5 years. With Chapter 13, the debtor is allowed to keep their assets and must propose a plan to pay back all or a portion of their debts over a 3-5 year period.
However, the time frame of filing bankruptcy can vary depending on the court’s backlog and the complexity of your case. Some cases may be resolved more quickly, while others may take longer. It’s important to work with an experienced bankruptcy attorney who can help you navigate the process and provide an estimate of how long it will take for your case to be resolved.
Keep in mind that filing a bankruptcy case is just the first step. The method of repaying debt and rebuilding credit can take much longer.
Find Out If You Qualify to File for Bankruptcy
Certain qualifications must be met to file for bankruptcy. The capabilities vary depending on the type of bankruptcy you are filing.
- Chapter 7 Bankruptcy: To qualify for Chapter 7 bankruptcy, you must pass a means test. The means test compares your income to the median income for a household of your size in your state. If your income is below the median, you qualify for Chapter 7. If your income is above the median, you may still qualify, but you must pass a second test that looks at your expenses and disposable income.
- Chapter 13 Bankruptcy: To qualify for Chapter 13 bankruptcy, you must have a regular income and your unsecured debts, such as credit card debt, must be less than $419,275, and your secured debts, such as a mortgage or car loan, must be less than $1,257,850
Both chapters 7 and 13 have a deadline to file, usually 180 days after the dismissal of a prior case or 120 days after the meeting of creditors in a previous case.
It’s important to note that even if you meet these qualifications, certain debts, such as most taxes, student loans, and child support, cannot be discharged in bankruptcy. It’s best to work with an experienced bankruptcy attorney who can help you evaluate your qualifications and determine the best course of action for your specific situation.