Most Americans face financial struggles at some point in their life. While some can develop a plan to claw their way out of debt, others only seem to fall deeper into the hole despite their best efforts. If you’re in the latter category, then you might be wondering what you can do to secure debt relief and acquire a fresh financial start. Personal bankruptcy may be a viable option for you, but a lot of people hesitate to act on it. There are several reasons, but one of the most prevalent is that potential petitioners are concerned about the challenges they may face throughout the process.
It’s true that there can be difficulties when pursuing bankruptcy, but with a little guidance you should be able to competently address them and secure the outcome that you want. Let’s take a closer look at some of the challenges you could face through your personal bankruptcy, that way you have a better idea of what to expect from the process.
There are several issues to confront in a personal bankruptcy case. Here are some that you should be prepared to deal with as you head into the process:
- Eligibility: You have to meet certain eligibility requirements if you want to pursue bankruptcy. For example, if you want to pursue a Chapter 7 liquidation bankruptcy, then your income will be compared to the median income in our state to gauge your ability to repay some of your debt obligations. If it’s found that you make too much to qualify for Chapter 7, then you’ll have to pursue Chapter 13. But even here there are certain eligibility requirements that you must meet.
- No co-signer protection: If you pursue Chapter 7 bankruptcy, there won’t be any protections for those who co-signed on a loan for you. As a result, your co-signer could be left on the hook for the entire amount of the loan. This is not only a financial consideration but also a relational and emotional issue that you may have to confront.
- Lifestyle changes: Regardless of which bankruptcy option you act upon, your lifestyle may have to change. In a Chapter 13 case, for example, you’ll have to adhere to a payment plan for three or five years. If you fail to stick to your budget and curtail your lifestyle, then your bankruptcy plan may fail, resulting in the denial of much needed debt relief.
- Non-dischargeable debt: While there are many types of debt that can be wiped away through the bankruptcy process, there are others that can’t. Student loan debt, child support, alimony payments and tax debts will all stick with you throughout your bankruptcy and will still need to be paid once everything is said and done. So, as you navigate your personal bankruptcy, you’ll need to develop a plan for how to pay back these debt obligations.
We know there’s a lot to consider when dealing with a personal bankruptcy filing. But don’t let the intricacies of the process scare you away. Instead, educate yourself as much as possible so that you can make the fully informed decisions that are right for you. If you feel like you could use some extra guidance in navigating the challenges ahead, then consider discussing the circumstances of your case with an experienced bankruptcy professional.