Is there a financial problem that a person can’t work out? We spend a lot of our lives worried about money as a metric for success, as if happiness and accomplishment means nothing without the capital that may come along with it. But when it comes down to it, there is no financial extreme that cannot be managed somehow.
Although bankruptcy seems final, the low credit rating that comes along with it may disappear in a few years. The consequences of this decision can result in a variety of issues, including the loss of many remaining assets for people in debt, but the point of bankruptcy is letting individuals and families recover.
The loss of remaining assets is often the result of filing for Chapter 7 bankruptcy. A bankruptcy judge may appoint a trustee to take over and sell off anything that may be exchanged for value beyond the essentials of life like home and transport.
One of these essentials is defined as a homestead, meaning the primary residence of a person at the time of bankruptcy. No one with a home should end up without one by the end of bankruptcy proceedings, so an owned residence and a certain amount or value of property surrounding it is exempted from trusteeship.
Every state has a different limit on how much a person can claim as a homestead. North Carolina allows up to $35,000 worth of equity in a home to be claimed, for example. Debtors above the age of 65 and in other special circumstances may increase this exemption to $60,000 in value.
For people looking to avoid shedding any items or properties, a Chapter 13 bankruptcy may be a better option. This version involves a payment plan for remaining debts that often lasts three to five years. To avoid asset sale, however, a person must have a reliable income to meet payments. This is why Chapter 13 is often called a wage earner’s bankruptcy.
This option is not easy, however, especially if people have seen their income take a hit as debts have mounted. If something changes after making a plan, like losing a job, the plan may need to be modified with the court’s permission.
If bankruptcy is becoming a real option, there may be no better ally in the pursuit than an attorney. Legal representation can make it easier to file for bankruptcy and determine which type is the best for an individual looking for financial freedom.