One of the most challenging aspects of bankruptcy law is that a large number of clients have misconceptions about the process and what it entails. One of these is when it is appropriate to file for bankruptcy. While the bankruptcy process offers several advantages including the opportunity to start over at building a good credit record, bankruptcy is not for everyone. This article discusses some of the situations in which you should think twice before filing for bankruptcy.
You are Able to Pay Your Debts
Occasionally, some people think that it might be a good idea to file for bankruptcy even though their debt is much smaller than their income. In these situations, a person should instead create a short or long-term plan to pay those debts. If you are not in a position to pay your debts, however, you should give serious consideration to filing for bankruptcy.
Your Debt is Primarily Taxes or Student Loans
Debt associated with taxes or student loans are particularly difficult to discharge through bankruptcy. To be discharged, income tax must meet several requirements including being three years old and not assessed within the last 240 days. Because you are unlikely to discharge most types of tax debt through bankruptcy, you will often not end up in a better position if you decide to file for bankruptcy. Student loan debt is also particularly difficult to discharge through bankruptcy. While it is possible to discharge these debts in bankruptcy by showing that you have a hardship, it is often difficult to do so. In either situation, it is often a wise idea to speak with a bankruptcy attorney who can tell you whether you are likely to discharge either specific debt due to taxes or students loan through the bankruptcy process.
You Have Not Personally Guaranteed Business Debts
Unfortunately, a large number of small business owners end up filing for bankruptcy. In situations in which a large amount of your debt is business debt, however, there are often less complex processes to handle this debt than bankruptcy. If you established a corporation or limited liability company to operate your business, you already have protection against business creditors. This means that creditors will not be able to come after you personally. If you have personally guaranteed debt, though, you should still consider the option of filing for bankruptcy.
You Recently Received an Inheritance
If you are about to receive or have already received an inheritance, filing for bankruptcy is often not a wise idea. If you declare bankruptcy and then receive an inheritance, there is a possibility that your bankruptcy trustee will be able to use the benefit to pay off your creditors. In situations in which you are considering filing for bankruptcy and have received or are about to receive an inheritance, you should not hesitate to speak with an experienced bankruptcy attorney.
Speak with a Bankruptcy Lawyer Today
If you believe that the bankruptcy process is right for you, you should not hesitate to speak with an experienced bankruptcy attorney like Jim A Lyon. While the process is complicated, Attorney Lyon has helped many clients navigate bankruptcy to obtain the results that they deserve. Contact attorney Lyon today to schedule an initial free case evaluation.