If you are facing serious financial struggles, like many Americans you may be considering bankruptcy. If so, you are not alone. Many great Americans have filed, from Henry Ford to Abraham Lincoln. That’s right; President Lincoln filed for bankruptcy in 1833 because of a failed business venture, according to a 1998 report in the New York Times.
So before you let yourself spiral into a virtual web of guilt and anxiety, like many debtors before, it is very important to put your financial past and future in perspective.
What is bankruptcy?
Before discounting the idea of bankruptcy, it is important to understand what it is and is not. First, saying you “went bankrupt” is somewhat inaccurate, as it portrays a negative picture of what is really happening. The proper description is to say that you filed for bankruptcy protections.
As such, before you go any further, make sure you understand that what you are seeking is a protection that is afforded under federal law and is available to all Americans who need it and qualify. The law is there for a reason, and there is no reason to feel bad about having to use it.
How Fast Can I be Free from Debt?
While it is understandable that most people ask their bankruptcy attorneys this question, fast is not always the best option.
You have several options for filing a bankruptcy case, and for those living in Providence, RI, the options will likely be different than those living just a short drive away. It all depends on your situation, state of residence, and your goals. If you want an immediate clean slate, then you may seek a Chapter 7 bankruptcy. This type of bankruptcy allows a relatively early discharge of debts. However, once you do this, you will have to give up many of your secured assets so that the creditors can be compensated in part. This means possibly giving up financed vehicles or even a home.
Under Chapter 7 of the Bankruptcy Code, the court will stop collections, prohibit creditors from contacting you, and all of your qualifying debts will be written-off. A Chapter 7 bankruptcy is the fastest and usually can be resolved within a few months to a year, depending on many factors.
However, you cannot simply ask for Chapter 7; you must first qualify. Every state has a means test. In Rhode Island, you will need to complete a Form B 122B.
This form helps the court determine if, based on the median income in your state, you qualify for a Chapter 7 bankruptcy. You should have your Rhode Island bankruptcy attorney assist you in completing the forms needed.
What if I Don’t Qualify for Chapter 7?
Rest assured there are many options for those who do not qualify for Chapter 7. Under Chapter 13, you can seek to restructure your debts into a short-term repayment plan over several years – up to five years maximum. In these cases, you are permitted to keep certain assets by “reaffirming” the debt.
Not only is Chapter 13 great for those who do not qualify for Chapter 7, but in many cases it is preferable. If you want to keep your home, a vehicle, or other financed possessions, you can reaffirm them and restructure the debt over a longer period of time. Keep in mind that every state has different rules for the total value of property you can keep in a bankruptcy.
Chapter 13 is also your only option if you own a business and need to continue operating it to support yourself. If your business needs to file for bankruptcy protections, you may wish to speak with a bankruptcy lawyer about Chapter 11.
How Do I Decide Whether to File or Not?
Take your time. Talk to your spouse, if married, and consult with creditors to review other options. Bankruptcy should not be taken lightly.
However, you should contact a skilled, experienced Providence RI bankruptcy attorney at Gemma Law Associates, Inc., who can evaluate your case and offer practical suggestions to help you get on the road to freedom. And remember, bankruptcy is a legal option for you to seek protection from overwhelming debt and start fresh.