Life is full of uncertainty. Sometimes unexpected life changes — like a divorce, job loss or serious illness — can completely throw people for a loop. People who had financial stability may be faced with a situation where they cannot pay their bills or other obligations. When unpaid bills add up, people may be subject to embarrassing, annoying and harassing creditor collection calls.
In this struggling economy, these problems are common for many Maryland residents. However, legal options including bankruptcy are available when people are having a difficult time. But, how do people know when filing for bankruptcy is the right choice for them and their families? And do people know which type of personal bankruptcy is right for them?
Experts say that people should make sure that they have explored all their legal options before turning to bankruptcy. Depending on the specific facts in each case, other financial options may be available to help provide debt relief. These options could include a home equity line of credit or negotiating a debt settlement with creditors. Experts also suggest that people attend credit counseling prior to considering bankruptcy.
People should consider bankruptcy when they are insolvent — Silver Spring Maryland bankruptcy lawyers advise. This means when people have more liabilities than assets. Generally, there are two types of personal bankruptcy that people will need to consider — Chapter 7 bankruptcy and Chapter 13 bankruptcy. Under Chapter 13 bankruptcy a repayment plan will be created and people will pay on their debts over three or five years. Under Chapter 7 bankruptcy, peoples’ assets will be liquidated to pay the debt, and remaining debt will be discharged.
People need to keep many factors in mind before choosing bankruptcy. However, they should know that many debt relief options are available.
Source: Daily Finance, “How to Know When Bankruptcy Is Your Best Option,” Katherine Muniz, Jan. 26, 2014