For many, filing for bankruptcy is the best solution to resolve hefty financial problems. Chapter 7 bankruptcy is an effective means of addressing overwhelming debt, and it’s the most common one filed in the United States. It involves giving up assets, which will undergo sale so that you can pay creditors.
A Chapter 7 bankruptcy case may take six months to complete, but the time frame may be shortened to three to four months if you hire a bankruptcy attorney in Provo to assist you through the entire process.
There are plenty of forms involved, not to mention complex legal issues to grapple with. Having an expert on hand will definitely help and get you on the road to financial stability faster.
But is filing for Chapter 7 bankruptcy really the best debt relief strategy for you? If you find yourself in one of these situations, then the answer is a resounding yes.
You are unemployed with only a few assets
The top reason why people file for bankruptcy is loss of income coupled with massive debt. This financial situation may be brought about by adverse events such as the death of a family member, a medical emergency, divorce, and other compounding factors.
If you are in this situation, have no income (but may receive unemployment benefits), and do not have ownership of a home – or if in general, your assets are few – then filing for Chapter 7 bankruptcy is advisable.
You are unemployed but own a house
What if you have a big asset – your home – but experiencing a loss of income? Under bankruptcy law, you may file for Chapter 7, even if the value of your property has fallen significantly below the value of the loan against it.
If the value of your house is lower than the value of the lien against it, this means that you have no equity in your bankruptcy estate, which includes all of your liquidated property. By having no equity, you can protect your house from being seized and sold to repay creditors.
When your bankruptcy petition is approved, you will be relieved of your obligations to pay your unsecured debts (debts without collateral). This would free up enough money to make paying your monthly bills more manageable.
You are unemployed, own a house, and have a large amount of home equity
Under Utah’s exemption system, you may exempt up to $30,000 of your home. This homestead exemption amount is doubled if you file a joint bankruptcy with your spouse.
If the exemption covers your home equity, then a Chapter 7 bankruptcy is the right strategy to take because it will allow you to keep your property.