There are two main branches of bankruptcy that consumers use, and choosing the right one matters. How do you choose the right one, you might wonder? The best way is by meeting with a bankruptcy attorney. They can typically tell you which branch to select by asking you a few questions. Here are the main questions the lawyer will ask.
How Much Money Did You Earn in the Last Year?
The first question is about your income, and this includes all the income sources you had for the last year. Your lawyer needs to know this amount to determine if you qualify for both branches. You can only use Chapter 7 if your income is lower than a specific amount in your state. If your income falls below this stated amount, you can use either branch. If your income is above this amount, you can only qualify for Chapter 13.
What Debts Do You Have?
The second question that affects this decision is your debts. You might want to write a list of every debt you have before meeting with a bankruptcy attorney. You can show the list to your lawyer, which will help them make a recommendation. If your debts fall into the qualifying category for a discharge, Chapter 7 is often the best choice. If they cannot receive a discharge, you might be better off using Chapter 13.
What Are the Details About Your Home?
If you own a home, the details about it matter when filing for bankruptcy. The first detail is your payment history. Are you behind on your payments? If so, you might lose the home through Chapter 7. Do you have a lot of equity in the property? If so, you might want to use Chapter 13. Your home details matter when filing for bankruptcy.
What Assets Do You Have?
The other assets you own also matter. When you use Chapter 7, you risk losing things you own. If you use Chapter 13, you will not lose anything. Therefore, your attorney needs to know about every asset you own before offering you advice.
These are four questions that you can expect a bankruptcy attorney to ask you during your consultation visit. The answers you provide will help the lawyer know which branch of bankruptcy to suggest. If you would like more information about Chapter 7 or Chapter 13, talk to a local bankruptcy attorney today. They can provide additional information regarding bankruptcy law.