Millions of people are struggling in debt today. But the last thought in their mind is to file for bankruptcy. The decision to file for bankruptcy is highly personal. It should be the last resort after you have tried and failed in all attempts to manage your debts. But, if bankruptcy is the only way to obtain debt relief and start life afresh, you can consider it. Remember that filing for bankruptcy is not a desperate move. It relieves stress and anxiety and gives you a second chance to rebuild your finances by enjoying the protection of the law. Let us discuss some of the top reasons to consider bankruptcy. For more information and legal assistance, talk to a skilled bankruptcy attorney.
Reasons for Filing for Bankruptcy
Bankruptcy is a potent tool for people in debt. It will not solve all your financial problems, but it can improve your situation, take away your stress and give you hope for the future. When you face financial difficulties, it helps to know what to expect once you file for bankruptcy, even before taking the bold move. Undoubtedly, filing for bankruptcy could be the best solution if you face severe debt issues. It will stop wage garnishments, most lawsuits filed against you by your creditors, and other debt collection activities. Bankruptcy also eliminates some debts like medical bills and credit card loans.
However, it is not all rosy when filing for bankruptcy. For instance, bankruptcy will not wipe out all your debts. You will still have to pay most of your loans and arrearages like tax debts, child support, alimony, and student loans. It helps to understand how bankruptcy works, what you stand to gain, and what you could lose before making the final decision. The help of a competent bankruptcy attorney goes a long way in ensuring that you are well informed, advised, and supported.
Here are some of the reasons to consider bankruptcy:
Your Credit Card Debt is in Excess
Credit cards make our lives easy. They offer great convenience when you need to pay for purchases and earn rewards. They are an excellent way to build your credit too. But you must use your credit cards responsibly to enjoy these and many other benefits. Sadly, most people find themselves in debt soon after obtaining a credit card. When your credit card debt is in excess, it becomes challenging to pay the debt and still manage your daily needs.
Credit card companies charge a high-interest rate, making it hard for you to settle your debts in time if you fall a little behind in repayments. The debt compounds as time goes by, and in a few months or years, you could find yourself in excess debt with no way of getting out.
The majority of people that file for bankruptcy do so to manage debts like credit card debts. Bankruptcy allows you to discharge some debts. For instance, if you file for Chapter 7 bankruptcy, you could discharge your credit card debts, which is a great relief. It will give you a fresh financial start, in which you can make better financial decisions. But, it would be best if you qualify for Chapter 7 bankruptcy for that to happen.
Also, you must be ready for bankruptcy's negative impact on those that successfully file for it. Debt discharge is good since it eliminates your obligation to pay discharged debts. But that will affect your credit. Your credit is crucial as it tells lenders the kind of borrower you are. Chapter 7 will remain on your credit report for 7 to 10 years. You could face difficulties obtaining a loan within that period due to your low credit score.
Your Medical Bills Are in Excess
Some people are drowning in debts because of the huge medical bills they cannot pay. You could have fallen seriously ill and had to take time off from work to recover. In that case, you will not be earning anything or enough to offset some of your medical bills. People involved in accidents accumulate large sums in medical bills, which take them several months or years to pay off. If that happened to you, and you have no way out of those debts, you can consider filing for bankruptcy.
It takes a long time for a person to regain their earning capacity after an accident or severe illness. Even after going back to work, you will not be in a position to pay off some or all your medical bills. Within a short period, you will have accumulated so much in debt to the extent that your debt is taking over your financial livelihood.
Fortunately for you, bankruptcy could help you deal with excess medical bills. Like credit card debts, you can discharge your medical bills if you qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy enables you to discharge most of your unsecured debts, leaving you with only secured debts to repay.
But, remember that you have to qualify for this type of bankruptcy to discharge your medical bills. Chapter 7 bankruptcy is designed for people who earn a good income and can pay off some of their debts. If you can devise a repayment plan for your secured debts, the court can grant your petition and discharge some of your debts.
You Want to Stop a Foreclosure
If you qualify for a mortgage today, you can acquire properties like a home, land, or even a business premise. But, you must adhere to the conditions set by your mortgage lender on the agreement you signed before taking the loan. However, if you face financial difficulties in the course of paying the mortgage, you will not make timely repayments as required by your lender. This is where foreclosure comes in. The mortgage lender or bank takes back the property you obtained through the mortgage against your will.
Nobody wants to lose their property to foreclosure, especially a home where they live with their family. It translates to a more significant loss on your end since the lender will quickly sell off the property, sometimes at a lower value, to recover what you owe them. Losing a property with sentimental value to you is a significant blow. That is why you can consider filing for bankruptcy.
Most mortgage agreements state that the bank or mortgage lender will repossess your property once you stop making payments per your agreement. If you have financial challenges and cannot make timely repayments, you could lose your property sooner or later. But bankruptcy can help.
Your bankruptcy attorney will advise you to file for Chapter 13 bankruptcy. If you qualify, the court will allow you time to reorganize your debts and develop a repayment plan that includes overdue mortgage repayments. First, the court will stop any activities by your mortgage lender to recover their debt. It means that your loan lender will not be able to foreclose. If you follow through with the repayment plan, you should be out of debt soon and will be able to keep your property.
You Are About To Lose Your Car
A car is an excellent investment for individuals, families, and businesses. It makes life easy since you can quickly run errands and manage your movements. Losing a car for failing to make timely payments is a significant loss to you, your family, or your business.
Many car loan lenders in California are willing and ready to help you make this critical acquisition on the condition that you will pay back the loan plus all the interests involved. Other strict conditions apply, including the possibility of the lender repossessing your car if you fail to honor the end of your bargain. You can lose your car if you lose your job or part of your income and cannot keep up with car loan repayments.
Filing for bankruptcy is your last resort if you have tried and failed to protect your car from being repossessed by your car loan lender. Like a mortgage, filing for bankruptcy can give you more time with your vehicle and a chance to reorganize your debts to make them more manageable. You could be able to pay off your car loan after bankruptcy.
The good news is that your loan lender will not be able to repossess your car once you file for bankruptcy. They will have to contend with the loan repayment plan approved by the court. Additionally, you can get your vehicle back after bankruptcy if your loan lender recently repossessed it.
You Want To Stop Harassment By Creditors
When you stop paying your creditors, they will do everything possible to recover their money. That could include making endless phone calls to you or sending harassing messages to compel you to pay your debts. Some creditors go to the extent of involving debt recovery agencies, which use harassment and intimidation to recover their client's money. It reaches a point where you cannot take it anymore and must seek legal action to stop the harassment.
Harassment by your creditors will take away your peace and joy. It could result in stress, anxiety, and even depression. You no longer want to pick up phone calls, read messages, or even emails for fear that your creditors could be contacting you about their money. Fortunately for you, bankruptcy offers a solution for this.
When you file for bankruptcy, the court puts an automatic stay, a federal law that automatically stops your creditors from establishing any contact with you. Note that this happens automatically, even before the judge grants your petition. The automatic stay prohibits your creditors from attempting to recover money from you. It gives you back your peace and happiness and can allow you time to strategize on how you can pay off your debts.
The stay works like a pause button, giving the court and your trustees time to consolidate your debts and assets. Once the court has a list of your debts organized in order of priority, they will decide how you will pay off your debts, starting with the most critical to the least important. The court also determines how much you will pay to a particular creditor.
But, the automatic stay does not apply to all creditors. If you have tax arrears, you will continue receiving reminders to pay your tax. The automatic stay also does not apply to child support and alimony payments. You will still be required to meet your obligations with these payments. If not, your ex-spouse has the right to sue you even after you have filed for bankruptcy.
You Have Tried and Failed in Debt Management
Obtaining credit today is easy if you have a good credit score and proof that you can repay it. However, your financial situation can change along the way, making it hard for you to keep up with repayments. Some people obtain different loans to help them meet various life needs. In the end, they face difficulties making timely repayments, especially if their financial situation changes.
If you are in a position where you have tried and failed in most debt management strategies, bankruptcy could be the only solution left for you. It could be that you have renegotiated with your creditors for better repayment terms but still cannot meet the end of your bargain. Or, you cannot make minimum payments to some of your debts due to the low income you receive. If you have tried everything possible to manage your debts and failed, you can try filing for bankruptcy.
Remember that bankruptcy should be your last resort after trying and failing in other options. Your bankruptcy attorney will seek to find what you have done and how effective, or otherwise, it was. Bankruptcy has disadvantages you want to avoid by all means unless it is indispensable.
If you remain in the same position for a long time, falling behind on your debt repayments and not making enough money for your daily needs, you could go deeper into debt since the interest rates in your debts will continue accumulating. Bankruptcy stops that and allows you to reorganize your debts in an easier way to pay off. Bankruptcy will also discharge some of your debts, leaving you with a few obligations you can comfortably manage with your income.
You Are Facing a Lawsuit
Your creditors will do everything possible to recover their money, including filing a lawsuit against you in a civil court. Some creditors sue you through a debt collection agency. Agencies like these will put up a good fight in court to ensure you pay back everything you owe their client, including all interest charges.
It must be stressful for you to face a lawsuit from your creditor. The law requires you to respond to the lawsuit within the given period. Failing to do so will cause the judge to rule the case against you. The judge's response could result in wage garnishment, repossession, or foreclosure.
Filing for bankruptcy can help you if you face a lawsuit and are afraid of what the judgment could be. The petition will trigger an automatic stay that stops all lawsuits filed against you by your creditors. That gives you sufficient time to plan how you will pay back your debts.
If you successfully file for Chapter 13 bankruptcy, you could discharge the debt against which you face a lawsuit. That eliminates any obligation you have to pay back the debt. But if filing for Chapter 7 bankruptcy, your trustee could take over the case, litigate it on your behalf, and then distribute proceeds from your assets to the creditors.
Regardless of your reason for filing for bankruptcy, it helps to work alongside an experienced attorney. You need someone to help you through the complex legal process and protect your rights against violation. A skilled bankruptcy attorney will study your case in detail, advise you, and offer assistance to ensure that you are making the right decision in the end.
If filing for bankruptcy is the right thing to do in your situation, and you are ready, your attorney will prepare the required documents within the deadline. Your attorney will also represent you in court and fight until you obtain a fair outcome for your case.
Find a Competent Los Angeles Bankruptcy Lawyer Near Me
Are you facing financial difficulties and not knowing whether it is the right time to file for bankruptcy in Los Angeles?
Filing for bankruptcy has advantages and disadvantages, which you must be aware of to make an informed decision. An experienced attorney will assess your situation to advise you on whether it is the right thing to do at that instance. Once you are ready to file for bankruptcy, your attorney will smoothen the process for you and protect your rights until the end of your case. We have a team of competent bankruptcy attorneys at Los Angeles Bankruptcy Attorney that are willing and ready to take up your case. Call us at 424-285-5525 and let us review your situation to determine the right course of action.
