Good people can find themselves in less than ideal financial circumstances. Many people live their lives just a few paychecks away from fiscal disaster. Whether the distress is due to poor planning, medical issues, a job loss, or all the above, bankruptcy may be the most practical way to get a new start. By speaking to a lawyer in Lawrence, KS, the debtor can explore options and determine if this step is the most practical solution.
Passing the Means Test
One of the first things that a lawyer in Lawrence, KS, will want to do is determine the eligibility of the client for some form of bankruptcy protection. This will mean taking a close look at the amount of income generated from all sources, the assets held by the client, and the amount and types of debt the client currently owes. All this information is used to determine if the client can pass what is known as a means test. The goal is to decide whether the debtor could pay off those debts in a reasonable amount of time, or if the task is impossible. Once the client passes the means test, the discussion can move to the next level.
Choosing a Type of Personal Bankruptcy
Not everyone qualifies for both types of personal bankruptcy. A Chapter 7 action is ideal for people with debts that are considered eligible for a complete discharge. Typically, all unsecured debts would be eligible, along with some secured debts, under certain circumstances. Examples of debts that generally cannot be discharged in a Chapter 7 action include many forms of back taxes and back child support payments. If a Chapter 7 bankruptcy is possible, the client could be debt-free in a matter of months.
Debtors can also consider filing a Chapter 13 bankruptcy. This approach allows the debtor to repay all or most of the debts over a period of three to five years. All payments are tendered to the court trustee, who then distributes the funds to the creditors. Priority debts like tax obligations are settled first, followed by other creditors.
When nothing else makes a dent in the debt, visit Joewlaw.com today and arrange for a consultation. Together, it is possible to explore each form of bankruptcy and decide if this is the right course of action for the client.