If you're in financial trouble, a bankruptcy lawyer may be the person who can help you out of it. But how does bankruptcy work, and how do you know when you need it? Below are some frequently asked questions provided by the legal team at Watson Law Firm of Harrison in Boone County, AR.

Bankruptcy 101: 4 Frequently Asked Questions

What Is Bankruptcy?

Bankruptcy is a legal proceeding which allows you to be released from your debts. By petitioning the court and fulfilling certain conditions, you can clear most debts from your record.

When Do I Need to File for Bankruptcy?

Bankruptcy damages your credit, and the effects are long-lasting. If you have any other means of repaying debts, including selling assets or establishing a payment plan, you should pursue those avenues first. However, for those with no realistic means to pay off debt, bankruptcy is an effective option. You should also consider bankruptcy if you need more time to pay off a debt and are facing foreclosure or being harassed by creditors.

What Types of Debts Can Be Eliminated Through Bankruptcy?

Unsecured debts, like credit cards and medical bills, are eligible to be relieved by bankruptcy. However, debtors may still seize property used as collateral for secured debts unless you agree to continue to pay those debts, and certain other financial obligations like most student loans and child support will remain despite bankruptcy proceedings.

What Types of Bankruptcy Are Available?

Chapter 7 bankruptcy completely eliminates most unsecured debt, but it may require you to give up major assets to repay as much of those loans as possible. You are allowed to claim certain things as exempt and those items can be kept. It is designed for individuals who make less than their state's median income. Chapter 13 bankruptcy allows you to keep most assets but requires debt repayment within a certain time frame. A bankruptcy lawyer can help you determine which type fits your situation. There are other Chapters to consider in more complicated cases.

If you're struggling under unmanageable debt, before you do anything see if a bankruptcy lawyer can help. Regardless your personal circumstances, the right advice can help in difficult times. The team at Watson Law Firm of Harrison provides representation in civil and criminal law, including bankruptcy. Contact them today at (870) 704-4037 or go online to find out whether the process is right for you. You can also find the law firm on Facebook.