Setting You Up For Financial Success

Is Bankruptcy a Good Option?

Our Kansas City Bankruptcy Attorneys Can Help You Decide

If you live in or near Kansas City and are considering bankruptcy, you may be wondering if Chapter 7 bankruptcy is the right option in your situation. While this type of bankruptcy is generally a quicker process than Chapter 13, the other type of consumer bankruptcy, fewer people are eligible for Chapter 7 – and you are required to demonstrate that your income and assets are below a specific ceiling, which can be complicated.

Generally speaking, most who file for Chapter 7 struggle to pay their bills and have a low income. This type of bankruptcy is designed to help consumers free themselves from unsecured debt, including credit cards, department store cards, certain personal loans, utility bills, medical bills, and more.

There are certain questions you can ask yourself in order to determine if Chapter 7 is the right option for you.

These questions include:

  • If you have property you want to keep, will you have to give it up with this type of bankruptcy?
  • Will enough of your debts be discharged to make filing Chapter 7 worth your while?
  • Even if you decide not to file Chapter 7 bankruptcy, are creditors legally barred from seizing your income or property? Essentially, if you are “judgment proof,” filing this type of bankruptcy may not be the best choice.

You may be a good candidate for Chapter 7 bankruptcy if:

  • Your credit score is low.
  • Your income is insufficient to pay the monthly household bills.
  • You don’t own much property; Chapter 13 provides more protection for property.
  • You are sinking in medical or credit card debt.
  • Creditors are calling incessantly and you are receiving collection notices in the mail.

What are the Downsides of Filing for Bankruptcy?

There are a handful of downsides for filing for bankruptcy. These include:

  • The bankruptcy will be on your public record.
  • Not everyone can file for bankruptcy due to income limits.
  • Your items not protected by exemption are sold (liquidated) and the proceeds are paid to creditors.
  • You’ll have to rebuild your credit.

While these downsides can be a tough hurdle to get over, filing for bankruptcy can still be your best option depending on your situation.

Nondischargeable Debts

There are certain nondischargeable debts with Chapter 7 bankruptcy, which means these debts cannot be discharged. Essentially, you will still have to pay these debts regardless of whether you file Chapter 7. These include recent income taxes due (from the last three years), alimony and child support obligations, student loans, debts incurred recently for luxury items (purchases of more than $650 to a single creditor within 90 days of filing for bankruptcy), and court judgments against you for injuries or death caused to others due to drunk driving. There are other debts a judge may determine to be nondischargeable as well.

With Chapter 7 bankruptcy, there are certain types of property that those who file must give up. These include secondary or vacation homes; a second vehicle; stocks, bonds, or other investments; family heirlooms; collections including coins or stamps; and even costly musical instruments.

Ultimately, if you have a steady income and valuable assets, Chapter 7 may not be a good fit for you. If you do not have significant income or assets, it may be the right choice. The Kansas City bankruptcy attorneys at Patton & Dean, LLC can help you decide. Call us today for a free consultation.

The Complete Bankruptcy Firm

Our Approach Sets You up for Financial Success
  • Before
    Listen to Your Story & Understand Your Situation

    Prior to working with you, we sit down to understand where you’re at in order to determine the best way to move forward with your case.

  • During
    Provide Representation During Bankruptcy Filing

    Throughout our relationship, you’ll be kept informed of the status of your case and understand your options in full to make educated decisions.

  • After
    Protect Your Credit at No Additional Cost to You

    The process does not end when your case concludes. We work with you to help you get back on the right track when it comes to your credit and finances.