For many people in California, the beginning of a new year is a time of reflection and goal setting. While the goal of some is to become more financially stable, those with overwhelming debt often see no path to achieve such progress. For these people, filing for bankruptcy may be an option that will provide them firmer financial footing.
Once the decision to seek such protection is made, there are certain parameters that must be met. Those who are seeking Chapter 7 bankruptcy must go through a means test. While those seeking Chapter 13 protection are not required to go through this process, they still must prove their income to determine how much they will be required to pay. Additionally, Chapter 13 requires petitioners to propose a plan for repayment of creditors that must be approved by the court and overseen by a court-appointed trustee, who will then determine how creditors will be paid.
While the benefits of seeking financial protection through bankruptcy often outweigh its risks, such an action is not without consequences. For example, requesting Chapter 13 bankruptcy will remain on the petitioner’s credit report for seven years. While it will result in a decrease in credit score, improvements can be made as bills are paid on time, among other actions.
Choosing whether to seek bankruptcy protection is a life-changing decision with a variety of consequences. Having an experienced professional who can provide accurate information and guidance about all options can help ensure that those struggling with debt are able to make informed decisions. From many, making this choice is the first step toward a less stressful and more promising financial future.