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When is filing for bankruptcy a good idea?

Some Tennesseans wonder if filing for bankruptcy may be the right choice for them. The answer to that question can have life-altering consequences. To learn more about what questions need to be answered before filing for bankruptcy, keep reading.

The opening move is to identify your options. The most common two are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 can eliminate most, if not all, of a person's debts in three-to-six months. Chapter 13 is more complicated and will take three to five years.

The next step is to assess alternatives. Bankruptcy is one option, but not the only one. Sometimes easier paths can set things right. Or perhaps a person is judgment proof in which case bankruptcy may not be as necessary.

Once the constellation of choices has been set, you need to figure out the options for which you are eligible. Which options are available will depend on your income, your debt load or both. Chapter 7 bankruptcy is only available up to a certain income level while Chapter 13 may not be available if your income is not high enough or your debt is too large.

From there, it is time to look into which debts will be forgiven - and, just as important, which ones will not. Not all debts are dischargeable in bankruptcy. Make sure the ones that you want to extinguish actually will be before filing a bankruptcy petition.

If the answers to the preceding question point to bankruptcy, then the question to ask is what will happen to your property such as your car, house and retirement accounts. Answering these questions can be tricky but important to deciding whether bankruptcy makes sense.

Finally, ask who may remain on the hook for those debts following a successful bankruptcy. Sometimes debts were co-signed. Bankruptcy will not extinguish a co-signers duty to pay.

To answer these questions, Tennesseans may benefit from discussing their situation with an experienced bankruptcy attorney.

Source: Findlaw, "Is Bankruptcy a Good Idea for You?" Accessed Feb. 28, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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