Can you file bankruptcy if you’re not behind on payments?
Filing for bankruptcy is a serious decision that often comes with the misconception that it is only for those who are struggling with unpaid debts. However, the reality is that bankruptcy laws are designed to offer relief to individuals and businesses facing financial difficulties, regardless of whether they are behind on payments. In this article, we will explore the different types of bankruptcy and how you can file even if you are not currently behind on payments.
Understanding Bankruptcy Laws
Bankruptcy laws in the United States are governed by the Bankruptcy Code, which provides various chapters for different types of financial situations. The most common chapters for individuals are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals to discharge most of their unsecured debts, such as credit card balances, medical bills, and personal loans. While this type of bankruptcy does not require you to be behind on payments, it is essential to meet certain eligibility requirements, such as passing the means test and having little to no disposable income.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, on the other hand, is a reorganization bankruptcy that requires individuals to develop a repayment plan for their debts over a period of three to five years. This type of bankruptcy can be beneficial if you are not behind on payments but want to consolidate your debts or pay off secured debts like a mortgage or car loan.
Why File Bankruptcy If You’re Not Behind on Payments?
There are several reasons why someone might choose to file bankruptcy even if they are not behind on payments:
1.
Debt Consolidation:
Filing bankruptcy can help you consolidate your debts into a single payment, making it easier to manage your finances.
2.
Stopping Wage Garnishment:
If you have debts that are being garnished from your wages, bankruptcy can help stop this garnishment and protect your income.
3.
Discharging Future Debts:
By filing bankruptcy, you can protect yourself from future debts that may arise, such as medical bills or unexpected expenses.
4.
Protecting Your Credit:
Filing bankruptcy can help you rebuild your credit by providing a fresh start and allowing you to establish a new credit history.
How to File Bankruptcy
To file bankruptcy, you must first complete credit counseling and file a bankruptcy petition with the bankruptcy court. You will also need to provide detailed financial information, including your income, expenses, assets, and debts. An experienced bankruptcy attorney can help you navigate the process and ensure that your rights are protected.
Conclusion
In conclusion, you can file bankruptcy if you’re not behind on payments, and it may be the right decision for you depending on your financial situation. Understanding the different types of bankruptcy and their benefits can help you make an informed decision and take control of your financial future. Remember to consult with a bankruptcy attorney to ensure that you are eligible and understand the implications of filing for bankruptcy.
