If you have recently found yourself struggling financially, you have probably come across the term “consumer bankruptcy” in your search for a solution to your financial plight. This is a term that is used to describe the bankruptcy process when it is being filed by an individual rather than a business and includes several different Chapters of bankruptcy. If you are considering whether any of these types of bankruptcy are right for you and your current situation, it’s time to learn more about consumer bankruptcy.
In today’s blog post, we are going to discuss what consumer bankruptcy is, the two most common types, and how to know whether filing for bankruptcy is the right decision for you. Continue reading to learn more and if you are considering bankruptcy or other debt relief options, it’s time to contact MLG Legal. Our Edina lawyers can help you determine your best path forward to a healthy financial future.
What Is Consumer Bankruptcy?
Consumer bankruptcy, also known as personal bankruptcy, is a legal proceeding that gives an individual a fresh start for their overwhelming debt. Consumer bankruptcy can discharge certain types of debts so that the individual filing is only responsible for specific debts. This can be achieved through the liquidation of assets or the creation of a manageable payment plan, depending on the type of bankruptcy filed. Bankruptcy is designed to enable an individual to get out from underneath debt that they are having trouble paying back.
While there is sometimes a stigma attached to filing for bankruptcy, it is a legal decision that an individual can choose when they feel they have no other options to get their lives back on track financially. Filing for consumer bankruptcy is not something to be ashamed of, but instead, should be seen as a solution to debt when none other is available.
What Are the Two Most Common Types of Consumer Bankruptcy?
When filing for bankruptcy, there are several types of bankruptcy to choose from. However, Chapter 7 and Chapter 13 are the most common types of consumer bankruptcy filed. Each has different conditions and in order to file, you must meet certain criteria.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also known as liquidation bankruptcy. This is the quickest, and usually preferred, type of bankruptcy filing. However, there are income and asset eligibility requirements that an individual must meet in order to file Chapter 7 bankruptcy. If an individual does not meet these requirements, they often must file a Chapter 13 bankruptcy instead.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is for individuals who do not meet the income requirements for a Chapter 7 or have assets they want to protect. In this type of bankruptcy filing, monthly payments are made toward a debt repayment plan. This plan is based on what the individual can afford on a monthly basis. The repayment plan lasts anywhere from three to five years and once the repayment period is finished, the remaining unsecured debt is discharged tax-free.
How Do I Know if Bankruptcy Is Right for Me?
If you are facing financial difficulties, you may be considering whether consumer bankruptcy is right for you. While bankruptcy can help you start over and begin repairing your financial health, it is not always the right solution for everyone. There are alternative debt relief solutions available. Whether you should file for bankruptcy or turn to another debt relief option depends on your particular case. The amount of debt you have, the types of debt, your income, and other factors can help determine which path is best for you. Speaking to an attorney that has experience in both debt relief and bankruptcy can help to ensure that you are moving in the right direction.
Schedule a Consumer Bankruptcy Consultation
Are you considering whether or not bankruptcy is your best option to move forward? The team at MLG Legal can help. Our Edina debt relief and bankruptcy attorneys can review your case and help you determine which avenue is right for you. Whether you choose to file a Chapter 7 bankruptcy, Chapter 13 bankruptcy, or pursue other debt relief options such as debt settlement, lease negotiation, or mortgage modification, we are here to help. When you choose to work with MLG Legal, you will have an experienced attorney by your side every step of the way. Contact us today to schedule a consultation to get started.