Filing for bankruptcy is not an easy decision considering the effects it has on your credit. Bankruptcy is a legal tool that allows certain debtors to have a fresh start. Debtors that are capable of making payments, meaning that they have enough disposable income to pay off their debt, may find other ways to settle their debt.
A bankruptcy may apply to individuals who are unable to save money, who are falling behind on payments, or who have accumulated debts that they will not be able to pay off for more than seven years. With that said, if you are facing tough economic times, a bankruptcy may be your best option. A bankruptcy allows individuals that have no means of paying back their debt, the opportunity to either discharge their debt or reorganize their debt through a debt settlement program. A bankruptcy allows individuals to experience a fresh economic start, however, it is usually at the cost of a bad credit report.
Debtors who find themselves in the following circumstance may want to consider the benefits of a bankruptcy. If you find yourself unable to save, pay more than the minimum on your debts, and you have received notice of a lawsuit, it could mean you qualify for bankruptcy relief.
If you are a debtor with a substantial amount of debt and you are considering a bankruptcy, you are encouraged to speak with a bankruptcy attorney. An experienced attorney will assess your situation and see if you qualify for a debt settlement program.
In some cases, a debtor is able to discharge some debt, establish a repayment program, and remove the negative credit report from your credit history. If after an assessment of your financial affairs it is clear that you require a bankruptcy, our attorney will help you choose the correct chapter to address your debt. There are many chapters in the bankruptcy law that can help alleviate different types of debts. An experienced attorney can help you achieve debt relief through a bankruptcy. To speak with an attorney about a bankruptcy or debt settlement, or to learn more about other debt relief options, you may contact the Bankruptcy Attorney at 424-285-5525
If you find that the following applies to you, you may want to consider speaking with an attorney about debt relief.
You are unable to save
Individuals that do not have disposable income at the end of the month will not have the ability to save money for a rainy day. When debtors are unable to save for a rainy day it usually means they are living paycheck to paycheck. If you are working full time and you do not have the capacity to earn enough to save because you are drowning in debt, it may be the time to speak with a bankruptcy attorney. A bankruptcy will help working individuals get back on their feet through a debt discharge or a debt settlement program. Individuals that are unable to save and pay off their debt may want to file a bankruptcy to help with their economic situation. If you are working full time, you should have the ability to save money for troubling times.
Your phone is ringing off the hook!
Creditors may contact you every day of the week between 8 a.m to 9 p.m depending on your area. If your incoming voice calls are mostly from debt collectors, it is a clear sign that you are falling behind on your debt. Creditors will only contact you if you are late on a payment, so if you answer their phone call you will want to explain your economic situation. More common than you may think, a creditor is willing to negotiate a debt settlement program to help prevent a bankruptcy.
Debtors that fail to address their debt may have their debt sold off to debt collectors who can later pursue lawsuits to claim property or a form of payment. A debt collection agency may pursue a debt for up to four years after the date of your last payment(in some states it is longer). Depending on your location, you will encounter debt collection calls on a daily basis until your debt is either paid off, discharged or becomes a stale debt that can no longer be legally pursued.
You do not qualify for debt settlement
Debtors that attempt to work out a debt settlement or loan modification program with their creditors and are unable to keep up with payment, may want to consider a bankruptcy. If you do not qualify for a debt settlement program or if your lender does not want to work with you, it is probably because they want a piece of your property or because you have not been able to abide to an already established debt settlement program.
A debt settlement program allows debtors to negotiate with their debtor in an attempt to find a debt repayment program that works for both parties. In most cases, creditors and debt collectors would rather deal with your debt settlement program than with a bankruptcy, so they are more than often willing to agree to a debt settlement program.
A debt settlement program allows the debtor to pay back the debt on their own terms and may have some of the debt discharged. In most cases, a debtor may pay a minimum of forty percent of their debt and in some cases, if you pay a large portion up front, the debt may be further reduced. However, not everyone qualifies for a debt settlement program. In some cases, your only option is to file for bankruptcy, especially if your creditor is taking legal action. Creditors can pursue wage-garnishments and a lien on your property and the only defense you have towards these actions is to either find a common ground with your creditor or file for bankruptcy If you are a debtor that cannot keep up with a debt settlement program you may find that a bankruptcy is your only option.
You have a big medical bill
Unfortunately, if you are caught without proper insurance, you may be reliable for a medical bill that is beyond your earning potentials. Debtors will usually file for bankruptcy after receiving an outrageous medical bill. Debtors that suffer an accident or experience a condition that requires medical attention may find that at the end of their treatment they are responsible for paying the bill. This happens far too often and is one of the leading causes for filing a bankruptcy.
You have undergone a divorce
One of the biggest reasons that a person files for bankruptcy is that they have filed for divorce and now they are responsible for a debt that they accumulated while married. Marriage debt can sometimes be too much to handle especially for the non-earning spouse. If you are responsible for a large amount of marital debt, you may file for bankruptcy to discharge most, if not all of your debt. In most cases, debts that married individuals incur are debts that can be discharged such as credit card debts or other types of loans. These types of debts can be discharged through a Chapter 7 bankruptcy or may be paid back through a debt resettlement program after filing a Chapter 13.
Losing your job
When you are fully employed, it is easy to waste money, apply for credit lines, and invest in material goods. The problem arises when you are no longer capable of meeting your monthly financial expectations. Individuals that rely solely on their 9 am to 5 am job as a source of income may encounter economic hardships if they are fired or if their pay is reduced. If you, unfortunately, become jobless and you are unable to get back on your feet after a few months, you may be falling behind on other essential payments. Once you do get a job it may be difficult to keep up with those payments if your new job does not supply the same earning potential as when you first took out the loan and credit lines. In another instance, you could face unemployment for up to a year. You may be working at minimum wage and you will find that you are far behind on your payments. If you lose your job or your earning potentials change you may start feeling economic pressures. Once you are unable to save money or pay your bills on time, it might be a good time to consider a bankruptcy or debt settlement program. Unfortunately, sometimes we fail to think of the consequences of not saving and investing our income.
You have taken out a secured loan to pay off unsecured credit
There are times when homeowners will take out a second mortgage to pay off unsecured credit. Paying unsecured credit such as credit card or medical bills with a home mortgage loan is never advised. When you take out a second mortgage it means you are allowing the creditor to establish a claim on your property in the event that you are unable to pay back your debt. For instance, you may pay off your credit card debt and later be unable to pay off the second mortgage. If you are unable to pay off your second mortgage the creditor may establish a lien on your property or worse your creditor may repossess your property to pay off the debt. If you filed for a second mortgage and you are facing foreclosure for failure to pay off the debt, you may want to speak with an attorney about ways that you can protect your assets. In most cases, homeowners who wish to keep their property will want to file a Chapter 13 bankruptcy that allows them to keep their property while establishing a debt repayment program that works around their earning potentials and financial affairs. When a homeowner files for bankruptcy, they will be protected by automatic stay laws which prohibit any debt collector or creditor from pursuing a debt or a debt collecting action.
You are paying the minimum amount on your debt
If you are paying the bare minimum, for instance, if you are paying 40 dollars to keep your 80 dollars a month obligation from being reported to the credit agencies, you will find it difficult to pay off the total debt. Individuals that are making single bare minimum payments may be heading towards a bankruptcy.
You are using credit to pay off another credit line
In some cases, it is a good idea to apply for a credit line with a low annual percent rate (APR) to pay off a credit line with high APR. Credit lines with low APR will ensure that you pay less interest at the end of the credit loan. However, the problem arises when the debtor is unable to pay off the debt and in turn, uses both credit lines to satisfy an economic obligation. If you have used a credit line to pay off another debt, it is important to use the money to actually pay off the debt and stick to one credit card. If you use both credit lines you will dig a greater trench that may lead to a bankruptcy.
You have no concrete plan of repayment
If you know that you are unable to pay off the debt you have incurred over the years, it may be a clear sign that you are heading towards bankruptcy. Debtors that are waiting for the lottery to pay off their debt should be realistic about their economic situation and should consider the benefits of a bankruptcy. As mentioned earlier, if you are living paycheck to paycheck and you cannot realistically pay off the debt within five years, it may be time to consider economic relief through a bankruptcy.
Too much financial stress
No individuals should be under constant financial stress. Individuals should have the ability to make ends meet and have enough to save for a rainy day. If you find that you just cannot meet other financial demands because you are making payments to other cards, it may be time to speak with an attorney about a debt settlement or a bankruptcy. A debt relief program will definitely help your situation.
