Many debtors take advantage of their federally protected rights to file for bankruptcy protection when they are faced with mounting debts they are unable to pay. But that doesn't mean that all debtors in every circumstance will be able to file.
There are also some strict rules that all bankruptcy filers must follow. Let's review some of the restrictions and misconceptions surrounding bankruptcy filings.
Debtors with substantial assets may be prevented from filing for Chapter 7 bankruptcy relief unless they can pass the Means Test. While failing the Means Test doesn't preclude your filing for bankruptcy under Chapter 13 where there is no Means Test and assets aren't seized.
Bankruptcy can provide much-needed financial relief for stressed-out consumers who are struglling to make ends meet. But it is not a magic panacea that eliminates all of your debts and financial responsibilities.
For instance, filing for bankruptcy makes it possible to stop the foreclosure process on your home. But it is virtually useless if you are trying to dodge paying back student loans, child support or alimony.
The best way to determine whether bankruptcy is a wise choice for you is to consult with a bankruptcy law attorney who can review your individual circumstances and offer a recommendation.
Many debtors who initially plan to file for bankruptcy discover after consulting with an attorney that they are basically "collection-proof." What this means is that while they still owe the debts, their creditors have virtually no recourse to collect the amounts that are owed to them. In these cases, it might not actually be necessary to file for bankruptcy relief, but there is no way to know for sure without discussing the matter with your attorney.
Advertising Disclaimer: Under Federal Law, we have been designated a Debt Relief Agency and we help people file for bankruptcy relief under the Bankruptcy Code. This information is not intended as legal advice and no attorney-client relationship is created. Results may vary. Results not guaranteed. Dramatization: Not actual clients in pictures and videos. -- Thomas C. McBride, attorney in Alexandria, LA