When and How to File Bankruptcy
When to File Bankruptcy
Your Debt Keeps Growing
Bankruptcy is often a good alternative for people with debt that has gotten so out of control that it becomes impossible to catch up. Many kinds of debt will build on themselves when they are left unpaid. An example of this is credit card debt. If you are only able to make the minimum payments, it can take a lifetime to pay back a typical balance.Fees and penalties can multiply debt. If you cannot pay the minimum amount due on your credit card, fees will be added to your account and the payment will become larger. The longer you are unable to pay, the more you will owe. Checking account fees are similar. If you don't have enough money to cover the checks you write, the fee will make your negative balance even deeper. It is a cycle that can be difficult to break.
You Are Going to Lose Your Property
You may be ready to consider bankruptcy when you have become unable to make your mortgage payments and are about to lose your home. Even if you only missed a few payments, the missed payments add up very quickly. Fees for late payments and payments that were not made add to the balance. Even if you are able to make your payments again, you may not be able to catch up.Filing bankruptcy can be a way of saving your home when your finances do not allow you to catch up on the payments. Having to deal with a foreclosure can further devastate your financial life, plunging you deeper into debt and bringing on more problems. Bankruptcy can stop the momentum and give you a chance to catch up.
You Cannot Pay Your Bills
A sudden loss of income, growing medical bills, and other financial difficulties can mean you can no longer pay everyday bills like utilities. You may not be able to pay for groceries and other necessary items. It is not sustainable to pay your regular expenses with credit cards unless you can pay them off. You will be digging yourself a hole that will be harder to escape.Bankruptcy can help you wipe out bills that are holding you back. You will be able to start a new financial journey that will alleviate your stress.
Benefits of Declaring Bankruptcy
Reduce or Eliminate Debt
Bankruptcy is designed to help people in desperate financial situations that they cannot get out of on their own. When you successfully file bankruptcy, many of your debts can be paid. This includes debt like credit cards and some loans. The amount you owe may be reduced or may be eliminated completely.The type of bankruptcy you claim and the type of debt you have will play a part in determining which accounts can be settled and how. In some cases, you will be able to keep your property. Your bankruptcy attorney will talk to you about your debt and assets to help you determine the best route for your situation.
Creditors Stop Calling
Having collection agencies calling you day and night can be stressful and embarrassing. Answering these calls can be difficult experiences as creditors willdo and say just about anything if they think they will recover money owed.Once you file bankruptcy, these collections agencies are no longer allowed to call you. If they continue to call, your attorney can take legal steps against them. You will no longer have to be nervous every time the phone rings, and you won't have to worry that creditors will track you down at work or speak to your relatives.
A Fresh Start
Claiming bankruptcy means that you will have a fresh start. Once you are free of pressing debt, you will have a second chance at taking charge of your financial situation. You will be able to create a new credit profile and being making better financial decisions. You will no longer have the anxiety that comes from worrying about how you are going to pay your debts.Whether your debt was the result of irresponsible decision making or you suffered a medical issue, divorce, or other situation that caused the debt, you can get a second chance through filing bankruptcy.
The Steps to Filing Bankruptcy
Hire an Experienced Attorney
The first thing to think about in filing bankruptcy is getting an experienced attorney who can guide you through the process. Bankruptcy law is complicated, and you will want someone on your side who understands how it works. Your attorney can advise you on the type of bankruptcy to claim and how to successfully present your situation to the court.
Attend Credit Counseling
Filing bankruptcy means that you agree to attend credit counseling. This is a time when you will meet with a knowledgeable advisor who can teach you how credit works and can give you tips for making responsible decisions. You will be able to ask any questions you have about credit and management of debt, and you will have the opportunity to make a practical plan for moving forward.
Begin Repayment Plan
When you file bankruptcy the court will determine a blueprint for tasks you must complete in paying your bills. Some of your debt will go away after the bankruptcy, and some will have to be paid back. You will have a detailed schedule about how that is going to happen.Depending on the type of bankruptcy you file, you will have a certain about of time to complete your first payments or to return belongings that you bought with specific types of credit.
Attend Required Courses
The court may require you to attend classes on debt management or other financial topics. You will need to complete these courses as part of your bankruptcy judgment. These classes will help you learn how to better manage your money and will give you the tools you need to deal with your money successfully in the future.
Rebuild Your Credit
Once your debts are under control, you will need to rebuild your credit. This will mean making your payments on time and opening new accounts in the future that you will successfully pay back. It will take some time, but the clean slate you get from your bankruptcy will give you the opportunity to build a stellar credit profile.Bankruptcy is an opportunity for people in financial trouble to turn their stations around and get a new start. If you think bankruptcy is the right option for you, contact us at Stockton and Stern LLC for a free consultation . We will listen to your story and tell you how to file bankruptcy. We will help you determine which kind of bankruptcy makes sense, and we will answer any questions you have. You can overcome your financial problems. Let us help.