If you’re ready to make 2012 the year you finally wipe your financial slate clean and start over again, then congratulations: declaring bankruptcy is one of the biggest steps you can take towards reclaiming your financial future. But before you pick up the phone to call your Dallas bankruptcy attorney , you’ll need to sit down and take an honest assessment of your finances.
You might think this step is unnecessary – after all, you already know that your finances are in trouble, and bankruptcy may be your only way out. But if you take the time to assess your finances, tally up what you owe and investigate which type of bankruptcy is right for you, you could end up discharging your debts faster and with less hassle.
So before you contact your Dallas bankruptcy attorney, here are the planning basics you need to know:
- First, you’ll need to understand the difference between Chapter 7, Chapter 11 and Chapter 13 bankruptcies. Unless you have an extremely high net-worth, you can immediately eliminate Chapter 11 bankruptcy, as it won’t be applicable to your financial situation. The ultimate choice between Chapter 7 and Chapter 13 bankruptcy lies with your income to debt ratio and a means test: do you still feel that you are able to pay the debts if the payment was structured to your income? Do you want your bankruptcy to drop off your credit score faster? Then Chapter 13 may be the way to go. Otherwise, declaring Chapter 7 bankruptcy eliminates most of your debts with no obligation to pay them back (however, the bankruptcy can stay on your credit score for longer). If you understand how the different chapters work it will save you and your bankruptcy attorney time.
- Next, you’ll need to assess your financial situation. If most of your debts are a result of credit card charges , medical bills and mortgage payments, then it’s definitely in your best interest to file for bankruptcy. If, however, your debts are primarily in the form of student loan payments, debts to the IRS, and child support or alimony payments, bankruptcy may not be able to legally dismiss your debts. But if your debts are a mixture of the above bankruptcy may still provide the relief you need.
Filing for bankruptcy might be the financial fix you need – a lot of bankruptcy attorneys offer free consultations so it shouldn’t cost you to find out if it is the right option for you.