Insolvency laws are complex and challenging to comprehend. If you're considering filing for insolvency, you may make many blunders that can affect your case negatively. The myths surrounding this process may also make things more confusing for you, leading to wrong decisions. If you don't want to lose your property and still be able to discharge your debt, you should consult with a bankruptcy lawyer. Here are three errors they'll protect you from.
Selecting the Wrong Option
There are two main types of insolvency that you can apply for: Chapter 7 and Chapter 13. The former is also known as liquidation because it involves the sale of non-exempt assets to repay creditors. The latter is a repayment plan that allows individuals to keep their property and repay their debts over an extended period. Your circumstances will dictate the type of bankruptcy you file. If you file the wrong one, you may significantly impact your case. For example, if you have nonexempt equity in your home, filing for Chapter 7 could make you lose your home. However, if you apply for Chapter 13, you'll keep it and repay your debts through a plan. Working with a lawyer will enable you to know the appropriate bankruptcy to file for. These professionals will assess your situation and recommend the option that won't hurt you more but will give you a reprieve.
Failing to Exempt Certain Assets
Under both Chapters 7 and 13, you're allowed to exempt certain assets from the insolvency process. Although exemptions vary by state, they may include essential items such as your home, furniture, clothes, and vehicles. If you don't claim the right exemptions, you may lose the property you would have otherwise kept. Lawyers understand the exemptions that every individual can be entitled to. If you hire them, you won't lose any property unnecessarily.
Not Meeting Bankruptcy Requirements
Before filing for insolvency, you need to fulfill some requirements. For instance, you may be required to take a credit counseling course and pass a means test. If you don't comply with these requirements, your application may fail to be approved. Some types of debt can't be discharged through insolvency, including student loans, alimony, and child support. Fortunately, an attorney can determine your eligibility and tell you whether you have dischargeable debts. This will enable you to make the right decisions.
Filing for insolvency is a big decision that you shouldn't take lightly. That's why you need to hire a bankruptcy attorney. They'll guide your footsteps, so you don't make blunders and help you successfully navigate the filing process.
For more information, contact a bankruptcy attorney.