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5 Reasons Why Consumers Do Not File Bankruptcy

Posted By Allmand Law Firm, PLLC || 1-Oct-2013

Considering Bankruptcy? 5 Factors Debtors Should Review

Sometimes the reason why you think you can't do something is from not knowing enough information in the first place. Bankruptcy is one of those things for a lot of people. There are times people may give up on their finances when the solution to their problem is right in front of them. It is just a matter of getting clarification from a bankruptcy expert.

The following reasons are a few common excuses as to why some don't file for protection they may actually qualify for:

  1. "I make too much money to qualify and I'll have to repay everything I owe." This may not be the case. Some people think that if they make too much money they won't qualify for debt discharge. The means test can help determine eligibility for Chapter 7 or Chapter 13 bankruptcy. You may qualify for a reduction in what you've been paying with a court-approved repayment plan.

  2. "I have back incomes taxes so I know I can't file." Limited circumstances may allow you discharge old tax debt under Chapter 7. Yet, you may be able to reduce what you owe if you file Chapter 13.

  3. "Filing for protection may cause me to lose my home." Many debtors who file bankruptcy get to keep their home thanks to the homestead exemption part of the bankruptcy code. Even equity in your home may qualify for protection. If you are facing foreclosure or your mortgage is underwater, you may want to review how bankruptcy can help.

  4. "I'll lose everything I own if I file." Think about some of the biggest corporations that filed for bankruptcy, and still managed to retain a large portion of their assets. Yet, the filing process is strategic and you need to have the right knowledge to understand how to go about the process. This means you should take time to discuss your concerns and questions with an experienced bankruptcy expert to learn how the process can protect your assets legally.

  5. "I have too much debt!" There is no limit in how much debt you can have in Chapter 7 or Chapter 13.


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