It’s common to work with a bankruptcy attorney when you’re having difficulty keeping up with payments. However, while allowing for a timely discharge or a manageable redistribution, there are several factors to consider. Understanding the basics will make it easier to prepare and determine the best route forward. Take a closer look at the following to figure out where best to start.  

3 Factors to Consider When Filing for Bankruptcy

1. What Chapter to File

There are two different types of bankruptcy available – Chapter 7 and Chapter 13. Chapter 7 is when the court accounts for your current income and all available assets. They’ll then discharge the unsecured debts, such as credit cards and medical bills, and use the liquid amounts to pay down the remaining balance. 

Chapter 13 is when you meet with a bankruptcy attorney and calculate what you can afford each month. They’ll set up a meeting with the creditors and propose a redistribution to make the payments more manageable. You’ll then have three to five years to satisfy the outstanding debts. 

2. Eligibility

Not everyone is eligible to file for Chapter 7 bankruptcy. It requires you to pass a means test, which measures the income from the last six months against the average household in the state. If it falls below that amount, then the court will approve the paperwork and begin the proceedings. Those who make more will have to settle for Chapter 13 and complete the new payback plan. 

3. Credit Score

Bankruptcy doesn’t just make your financial issues disappear. It can remain on your credit report for up to 10 years, which may increase the difficulty of securing future loans. Keeping up with the monthly payments and setting a budget are effective ways to increase the numbers.

You could also ask to be named as an authorized user on another person’s credit card. As long as they avoid late fees and overspending, then both scores will experience a gradual boost. 

If you’re looking to file for bankruptcy, reach out to Greene Law PC in Farmington, CT. They have more than 25 years of experience and commit to upholding the rights of their clients. As bankruptcy attorneys, they understand the intricacies of the process and are willing to supply legal advice. From tracking down the facts to building a case, these professionals will be with you every step of the way. Call (860) 676-1336 to schedule a consultation or visit their website for additional information on this local law firm.