For the right person, bankruptcy offers an accessible path out of debt and the opportunity for a stronger, more secure financial future. But the decision to file is a major one, as it disrupts credit scores and stays on credit reports for up to a decade. However, there are many benefits to filing for bankruptcy, such as discharging debt. If you’re unsure whether this step is the right solution for you, below is an in-depth guide to the topic. 

Qualifying for Bankruptcy

To qualify for bankruptcy, you should pass a means test, which compares the debt-to-income ratio. Chapter 7 bankruptcy is a dismissal of most types of unsecured debt, and a filer must not make over the median income of a household of the same size in the same state. In New York, for instance, the median monthly income for a one-person household is $4,611.08, and for a two-person home, it’s $5,945.25. Chapter 13 bankruptcy restructures existing debt into a long-term repayment plan. To qualify, unsecured debts cannot exceed $394,725, and secured debts must be under $1,184,200.

Reasons to File

There are several viable reasons to file for bankruptcy. Most people who file choose to do so because of an inability to realistically repay their debts with their current or projected future income. Debt can quickly spiral out of control, especially in situations where one has lost a job or has acquired significant medical expenses. Past-due bills that lead to creditor harassment, lawsuits, and wage garnishments also lead to bankruptcy filings. This solution gives an individual a clean financial slate to start fresh. Also, for those facing home foreclosure, bankruptcy can temporarily halt the process so the homeowner can meet with an attorney and explore available solutions.

An attorney's guidance is crucial to a smooth and successful bankruptcy experience. Robert A. Schwartz has been serving the Rochester, NY, area since 1982. If you’re facing debt and you’re unsure whether this solution is right for you, he will outline its benefits and walk you through the filing process. Call (585) 334-4270 to schedule a free consultation or visit his website to browse his services.