The decision to file Bankruptcy is a tough one that should not be taken lightly. It will affect your credit for ten (10) years. People file bankruptcy for many different reasons, and some people have a moral aversion to filing bankruptcy. However, this federal law was enacted to protect the debtor and to assist when there are financial hardships that cannot be overcome alone.
Do you need help getting on your feet for the new year? Do you struggle to pay your mortgage and want to save your home? Did you go through a dissolution and now need to organize your expenses with your new adjusted income
Bankruptcy may be the answer you are looking for to help you work out your financial situation.
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Why should I consider filing for bankruptcy?
There are many different reasons why a person/people should consider filing a bankruptcy. Bankruptcy may assist you with eliminating the legal requirement to pay some or all of your outstanding creditors (who you owe money to), this is called a discharge of your debts.
Bankruptcy may be able to:
- cease or stop the repossession of a car or other property
- reduce the amount you owe on a car based on the car’s value
- stop or cease a wage garnishment that was awarded against you
- stop collection harassment
- restore or prevent your utility company from terminating their services
- assist in stopping a legal foreclosure action on your homestead property or your mobile home assist you in having the opportunity to catch up on missed payments
- strip an unsecured second mortgage
Is Bankruptcy right for me?
There appears to be a negative stigma surrounding bankruptcy; however, this may be the only option for a family trying to get back on their feet. There are several different types of bankruptcy, and you have to determine which is the correct chapter for you, or if there are other options that let you avoid a bankruptcy all together.
The most common bankruptcy for individuals is a chapter 7 bankruptcy, this is like a “do over” for a person who has not filed for the last eight years. Chapter 7 will let you keep certain assets, have you still pay some liabilities (most IRS debt, student loans, child support…) and the rest (medical debt, credit card debt, judgments, …) to be discharged.
Chapter 13 Bankruptcy is known as a “reorganization payment plan” this is to save your rental property, stop a foreclosure, and keep you on a budget that will help you maintain all of your assets while satisfying your creditors by paying them pennies on the dollar (everyone’s case and plan are different).
Before you take protected money and pay off unsecured debt, speak to an attorney about your rights, even if you are being sued, bankruptcy can help stop that lawsuit.
How to handle finances when filing bankruptcy
Most people are feeling a financial strain right now, and it is very hard to see the light at the end of the tunnel. Focus on paying the important items first and try your best to curb your spending on items that are not necessities. You can reduce your bills by reducing your cable/internet package, canceling subscriptions, suspending your pool service and your lawn service since chances are you are home right now to take care of that yourself. Contact your mortgage company or landlord to see if you can get a break with your rent or mortgage this month. You have certain expenses that you cannot avoid such as child support.
Be careful engaging in extra spending. It may cause those particular debts not to be dischargeable. Be smart about how you spend your money and what debt you are incurring so you are not stuck in the unfortunate predicament in the near future of not being able to file bankruptcy. This would happen if the court finds you increased your debt intentionally.
The financial impact of Covid-19 and bankruptcy
Unfortunately, more people than usual are feeling financial stress because of the effect of Covid-19. There is no doubt covid-19 has lingered longer than anyone anticipated and the financial effects are devastating. People are still out of work, using their retirement and savings to make ends meet. If you are falling behind on your mortgage, you may qualify for bankruptcy to assist you and get you back on your feet while protecting your home, and other assets.
Not all debt is dischargeable in a bankruptcy, but you will not know or understand what relief you can obtain unless you contact a qualified attorney to answer those questions for you.
Bankruptcy and tax season go hand in hand. You need to know what assets you could potentially lose and what chapter you can file to protect your assets. Sometimes your income is a factor, and other times it is not, depending on what type of bankruptcy you need to file. There are a few other expenses that are permitted when you need to use your refund and file bankruptcy around the same time.
If you are having financial struggles and you need information to determine if bankruptcy is right for you and your family either now, or in the immediate future, do not guess at what you can and cannot do with your tax refund or other income you may receive.
Complimentary consultations
Whether you are looking to liquidate, consolidate, or generally find a new start for your financial security, filing for bankruptcy may be the option for you. Individual, joint, and business entities have options. Our attorneys can help identify which chapter may suit you best. Fill out our Bankruptcy Consultation Form and we’ll schedule you for a complimentary thirty minute consultation virtually or in person. When you’re going through your worst, we’re at our best!
