What To Expect When Filing For Bankruptcy
If you are facing an overwhelming amount of debt that you cannot repay on your own even with a tight budget and working overtime, you may be wondering if filing for bankruptcy is right for you. For many people, this is a complicated and difficult decision with many factors to consider. Bankruptcy isn’t the best choice for everyone and will affect your credit and finances for years to come, so it’s important to make sure you’ve exhausted other resources and discussed your financial situation carefully with an experienced Gilbert bankruptcy lawyer before you decide to proceed. Bankruptcy will not only affect your own life but will impact the life of your spouse and dependents as well.
There are many myths about bankruptcy, but your lawyer can help you separate fact from fiction. But because filing for bankruptcy will have a significant impact on your family, it’s crucial that you enter the bankruptcy process with a full understanding of how it can affect your spouse and dependents so you can minimize the negative side effects as much as possible.
How will bankruptcy affect your family? Here are some of the most common implications.
Understand Which Assets Are Protected & Which Are Not
Any money that is held in a trust for your child’s future is not part of your bankruptcy estate and will not be liquidated. Additionally, any funds that your child has in their bank account is also protected from liquidation and is not considered to be your money even if you are a custodian for the bank account.
However, it’s crucial that you do not transfer any of your own money into a trust or bank account belonging to your child in an attempt to keep this money protected. Doing some can be considered fraudulent. You will either be required to return this money to its original account or have your bankruptcy petition denied.
Some Of Your Child’s Or Spouse’s Property May Be Liquidated
If you file for a Gilbert Chapter 7 bankruptcy, all of your nonexempt assets will be liquidated to help repay your debts. Although Arizona law protects some of your assets, some toys, furniture, and other household items that are deemed nonessential could be liquidated by the bankruptcy trustee. This can include items that belong to your child or spouse.
Your Child Might Need To Change Schools
If you file for a Gilbert Chapter 13 bankruptcy and your child attends a private school, your child may need to transfer to a local public school. Your bankruptcy trustee will utilize a “means test” that will help them determine whether you qualify for a Chapter 13 bankruptcy. You will be able to deduct up to $1,875 per child, per year, for educational expenses. If your child attends private school and their tuition exceeds this amount, you’ll need to either transfer your child to a less expensive school or obtain a scholarship.
Will My Bankruptcy Affect My Spouse’s Credit?
When you file for bankruptcy, you have the option to file individually or jointly with your spouse. This may be a difficult decision, so be sure to have good communication with your spouse and consult together with your Gilbert bankruptcy attorney before finalizing your decision. If you decide to file individually, only your credit score will suffer. This means that an individual filing will protect your spouse’s credit from being affected. However, if many of your financial obligations and debts are shared, a joint filing may be the right decision, even though this will negatively affect both of your credit scores.
Even if you choose to file bankruptcy individually, your spouse will still feel the impact. People who file for Chapter 7 bankruptcy will lose nonexempt household assets and possessions, which may include your spouse’s possessions. If you file for Chapter 13 bankruptcy and need to follow a tight budget and repayment plan, your spouse’s cooperation and dedication to following the budget will be crucial to successfully making your debt payments.
Consult With a Trusted Bankruptcy Lawyer In Gilbert
Filing for bankruptcy is a big decision that will affect your life and the lives of your spouse and dependents. For many people, filing for bankruptcy ultimately has a positive effect on the whole family by eliminating overwhelming debt that is keeping the family from a successful future. If you are wondering whether filing for bankruptcy is right for you and want to talk about the best way to proceed, contact the experienced attorneys at Gilbert Bankruptcy Lawyers. We have assisted hundreds of families just like yours through the complexities of bankruptcy, and we are ready to help you, too! Enjoy the peace of mind that comes from discharging debt and gaining a fresh start. Call our office to learn more about how we can help.
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