Becoming overwhelmed by debt is a situation that can happen to anyone. In modern times, the challenges of easy-to-get credit, job uncertainty, medical bills and various kinds of economic uncertainty easily leave one feeling helpless. If filing for bankruptcy seems to be the only solution, that too comes with many questions and concerns about whether it is the right direction to take. Thankfully, as an experienced Hartford, CT bankruptcy lawyer – including those who practice at The Law Offices of Neil Crane – can confirm, when those struggling with debt learn about their options in detail, they can make the most informed decision possible about their financial situation.
Understanding Chapter 7 Bankruptcy
The first step is understanding the basics of bankruptcy. First, it’s important to know that filing isn’t just for wealthy people. There is no minimum debt amount required. While there is no amount threshold, anyone filing for Chapter 7 bankruptcy must pass a means test. This determines whether your financial records, including income, debts and expenses, meet certain guidelines. If you don’t meet this threshold, filing under Chapter 13 will be your most likely available option. Filing typically eliminates unsecured debts including, credit cards, medical bills, and personal loans. It is also important to know that there are non-dischargeable debts that will not be included, such as alimony, child support or tax liens.
The Don’ts of Filing
If filing for bankruptcy is becoming the best alternative for your situation, the process will typically take several months to finalize. During that time, avoid doing the following:
- Stop Paying Creditors – Routine payments should be continued to be made, but don’t make any large payments unless your attorney advises you otherwise.
- Acquire New Debt – Depending on the situation, this could be a legal fraud issue. Don’t enter into any new credit or wrack up debt on existing credit without speaking with a lawyer.
- Unusual Transactions – The purchase of luxury items or something out of the norm needs to be avoided.
- Using Retirement Funds – In most cases, these funds are protected during bankruptcy. Continue to save them instead of paying off any debt with them.
- Transfer Property – Along with being illegal, doing this could derail the bankruptcy process.
- Give Away Assets – Any assets must be included when filing. If during the wait, a vehicle or jewelry is given away, it will lead to added trouble.