Bankruptcy law is a set of laws that are used by businesses and consumers to reorganize debt. If you are considering bankruptcy, you must make an informed decision. Here are three questions that can help you decide if bankruptcy is the right choice for you.

1. Which Chapter of Bankruptcy Should I File?

Federal bankruptcy law in the U.S. is divided into chapters. The chapters of bankruptcy law address different types of debtors and offer different options for discharging debt. For example, a common chapter for consumer debt is Chapter 13, also known as a wage-earners plan.

Each chapter has specific laws and requirements. Your first step in filing for bankruptcy is learning about your options for each chapter available. Understanding your options will help you to make an informed decision. An attorney can explain the process and which chapter is right for you.

2. What Debts Are Covered Under Bankruptcy?

There are dischargeable debts and non-dischargeable debts that can be managed through bankruptcy. Common dischargeable debts include credit card debt, medical bills, and personal loans. Student loans, child support, alimony, and certain tax debts are typically not dischargeable.

A dischargeable debt is a debt that can be forgiven, while a non-dischargeable debt is a debt that you will continue to be responsible for. Understanding what debt is covered under bankruptcy is important to make an informed decision about filing. If most of your debt is consumer debt, then bankruptcy is likely a good option. If most of your debt is tax or student loan debt, it may not be the right choice for your financial situation.

3. What Assets Are Considered in Bankruptcy?

There is a prevailing myth that you must surrender all your assets if you file for bankruptcy. This isn't necessarily true. In some cases, you will have to surrender some of your assets to pay off debts, but in many cases, you can keep what you own. Don’t let this myth dissuade you from getting the relief you need.

According to the Administrative Office of the U.S. Courts, there were over 418,724 bankruptcies filed from 2022 to 2023. Many filings allow debtors to keep their homes, cars, and other assets. Before you make bankruptcy decisions, you must speak the law professionally.

Bankruptcy law is there to protect you. If your debt is overwhelming, get the answers you need to make an informed decision. Call Law Offices Of Rex J Roldan PC today.