Being “bankrupt” and not being able to pay your debts should
be considered two different situations. You often hear people throw around
the term or expression of going “bankrupt” when they file
bankruptcy protection. Yet, it may not necessarily mean you can’t pay what you owe.
When a consumer is considered insolvent they may be unable to take care
of their financial obligations when they are due. In the situation when
someone is considered “bankrupt” this includes utilizing legal
avenues provided under federal law. In other words, a bankruptcy petition
has been filed and the debtor is on their way to seeking protection available
to them under the bankruptcy code.
So Do You Have to be Insolvent in Order to File Bankruptcy?
Not necessarily, even though many people feel you have to be unable to
pay your debts in order to file for protection. Another aspect to consider:
a person may be insolvent but choose not file bankruptcy protection. Meaning,
creditors may attempt to collect from the debtor sometime in the future
within rights under state law.
In bankruptcy, you do not have to be insolvent in order to qualify for
filing. This is why some debtors decide to either look into the process
earlier or file before their financial situation becomes a stressful disaster.
Taking the step to file sooner than later may even help you retain more
financial assets now than waiting until you hit rock bottom. As always
you should review your situation with an experienced bankruptcy lawyer
in Dallas-Fort Worth. If you would let to set up a free consultation with
one of our bankruptcy attorneys, you are free to
contact us today.