Filing for bankruptcy is often the last resort for people struggling with crippling debts. However, you need to get it right to enjoy the liberating benefits that come with it.
Money is tight, and you’re backed into a tight corner. So, you mention to a friend that you’re considering filing for bankruptcy. Your friend suggests that you hire the best Chapter 7 bankruptcy lawyer in Salt Lake City to help you. What would be your reaction?
To say that you’re shocked would be an understatement. Why would you splurge good money to hire a lawyer when you’re hardly making ends meet? The truth is, things can get worse if you attempt to go about the process alone.
It’s complicated
Despite requiring only one visit to the courthouse, filing for bankruptcy is a tricky undertaking that is best left to the finest legal minds. It also entails a considerable amount of paperwork as the court tries to understand your financial standing. It also takes a significant amount of time, anywhere from four to six months, despite costing you $335 in administrative and filing fees.
First, you must convince the court that you meet the conditions necessary for the debt discharge. The first step entails passing a “means test” as the court seeks to ensure that you’re not filing for bankruptcy as a way to stiff your creditors. Your level of income also determines your eligibility. If your current income is higher than the state’s median income, you’ll be forced into a Chapter 13 bankruptcy with a three-to-five-year repayment plan.
Passing a means test entails convincing the courts that your disposable income isn’t enough to wipe out your unsecured debts with a five-year repayment plan. It makes the difference between forgiveness of unsecured debt and getting into Chapter 13. Having a professional by your side increases your chances of success.
It’s unforgiving
Being forced into a Chapter 13 payment plan isn’t the worst possible outcome when filing for bankruptcy. You can also get denied, be sent to jail, or get fined a hefty sum of money. There are lots of scammers out there looking to stiff their creditors. The government comes down on such individuals with a sledgehammer.
Trying to hide or give away some of your assets that ought to be part of your filing can have your petition thrown out. You could also get slapped with fines of up to half a million and a jail term of five years. Having an expert by your side can help you avoid mistakes that could lead to such an outcome.
Trustees come after every income in the household. That includes any money a child listed as a dependent might make in their part-time job. Working with a seasoned lawyer can help you get around such issues without breaking the law. Although unreliable, income from part-time jobs can cause you to fail your means test and deny you a chance at debt forgiveness.
Securing a Chapter 7 bankruptcy gives you a chance to come up from under a crippling debt burden. The process forgives most of your unsecured debts, such as credit cards, medical bills, and taxes. It affords you a rare chance to re-organize your finances, so you need to get it right the first time.