

Bankruptcy can be a frightening concept, but when you find yourself in overwhelming credit card debt, you may not have any other options. If you are receiving calls from bill collectors, not making payments, or simply at a loss of what your financial situation is, it may be time to evaluate what steps you should take next.
Assess Your Situation
The last thing you want to do when you find yourself in a financial crisis is panic. There are many options available to you regarding debt reduction that you may not have considered or know about. Sit down and review your finances to see where your assets are and what liabilities you have. If you determine that your debt it too much to overcome alone, begin to look at alternatives to get you out of debt. However, in the case that you are in insurmountable debt, declaring bankruptcy may be the easiest, and most affordable, option available to you.
What will Bankruptcy Do?
Declaring bankruptcy carries with it pro’s and con’s, and it will be up to you to determine if it is worth it. The primary goal of declaring bankruptcy is that it will alleviate most of your current financial obligations. You will be released from your debt and given a fresh start so to speak; but some of your assets could be liquidated to pay off debt, and the bankruptcy will affect your credit for years to come. This still may be the best option available as it does significantly improve your short term financial situation. Typically, you will begin to see relief from the debt within 3-6 months of the filing, and the letters and phone calls from collectors will cease. Your assets will be placed in the care of a bankruptcy trustee, and with the right attorney you may be able to keep most of those assets instead of them being liquidated. Luxury possessions may be liquidated, but it is common for the individual to maintain possession of the assets. In cases where property is turned over to the trustee, it is typically because the amount of debt far surpasses the value of the assets, making it a necessity to turn over.
Two Types of Bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy filings and is sometimes referred to as “straight bankruptcy”. This is not for everyone, as this is the form of bankruptcy that typically will require most assets to be sold off to repay creditors. But if you have recently suffered unemployment, divorce, or a large medical expense, it may be the only way to eliminate debt.
Chapter 13 bankruptcy is known as reorganizational bankruptcy and may be the better alternative if there is property you want to keep. This will allow you to pay off your debt in a period of 3-5 years instead of liquidating assets to pay off debt. After the court approves the bankruptcy, creditors must cease contact with you and you will be allowed to maintain possessions as you pay off the debt.
How to File
The first step is to compile all financial records that will be used to present your case to the court. It is required that you meet with a credit councilor before your case is filed. This will give you a better understanding of your financial situation and will help you with any other options you may have. The courts want to see that you have exhausted all possible outcomes before declaring bankruptcy, which is why the credit councilor is required. Then comes the process of actually filing bankruptcy, which is where you should have an attorney to assist you. Once the filing is in the court, a trustee will be assigned to the case to take control of any assets that will be turned over to the creditors.
Filing bankruptcy can be a frightening experience, but often times it is the best solution available. Having the right attorney by your side can make all the difference when it comes to keeping assets in a bankruptcy case. It is possible to attempt to file bankruptcy on your own, but this will almost undoubtedly result in the liquidation of assets to your creditors. It is also important to know what type of bankruptcy will best fit your situation, and what other options are available to you. Contact Holland Law for help with your bankruptcy case.