How to Determine Whether a Person Should File for Bankruptcy
The general rule of thumb is anyone can qualify for a bankruptcy, but is it in a person’s best interest to file?
The answer is not simple.
There are three major types of bankruptcies that people may use to discharge debts or work as a payment plan. Chapter 7, Chapter 13, and Chapter 11. Most people qualify for a Chapter 7 bankruptcy, however even if a person qualifies for a Chapter 7, a Chapter 13 may be the best option based on the goals of a client. For basic credit cards, federal taxes, personal injury claims, medical bills, generally a Chapter 7 is the best choice. For people with underwater mortgages or those currently behind on mortgage payments, a Chapter 13 may be a viable option as a person will receive a discharge on most debts, will not be require to pay most unsecured creditors (i.e. Credit cards) and can force a lender to accept back payment over extended periods of time (i.e. stop foreclosures and extend payments over time).