Bankruptcy Advice at the Right Time
If medical bills are piling up or you have gotten in over your head with credit card debt, you may find it impossible to pay your bills. You might be wondering if bankruptcy can help you find relief from crushing debt.
For many people, bankruptcy is the best option and can provide a fresh start to a better financial future. However, bankruptcy is a big decision. There are many things to consider in order to determine whether or not it is in your best interests. Read the following advice on bankruptcy so that you can make an informed decision about how to deal with your debt.
Take an Honest Look at Your Financial Situation
The first thing that you will want to do is assess your situation to determine if you are in the danger zone. Many people get so overwhelmed with being in debt that they avoid really examining their situation. If you answer yes to any of the following questions, then you need to do something quick before things get any worse.
- Are you behind on credit card payments?
- Is your auto loan company or bank threatening to repossess your car?
- Are bill collectors calling you constantly?
- Have you unsuccessfully tried debt consolidation?
- Are you facing a lawsuit because of unpaid debt?
- Are your wages being garnished?
- Do you feel worried and anxious about the amount that you owe?
If you answered yes to any of the above questions, then you are facing serious financial issues that are not likely to resolve on their own. In these situations, declaring bankruptcy may be the only way to get relief.
Types of Bankruptcy
There are two types or “chapters” of bankruptcies and both have important differences. Which one is right for you depends upon a number of factors.
- Chapter 7 bankruptcy – A Chapter 7 bankruptcy involves selling your assets to pay back all or some of what you owe creditors. Once your assets are liquidated, then your debts will be forgiven or discharged. This bankruptcy is best for individuals that don’t have many assets. You must meet certain income requirements to file for a Chapter 7 bankruptcy—not everyone is eligible. It is best to get bankruptcy legal advice to determine if you meet the requirements of a Chapter 7 bankruptcy.
- Chapter 13 bankruptcy – In this type of bankruptcy filing, your debts are reorganized rather than liquidated. You agree to repay a portion or all of your debts under a payment plan. In return, after you finish your plan, most debts are discharged and you can keep certain property. This type of bankruptcy is typically best for people who have property, such as a house, that they want to keep. It is also used by individuals that are not eligible to file a Chapter 7 because they make too much money.
Here are some of the questions that are most frequently asked by individuals considering bankruptcy.
Can a Bankruptcy Stop Foreclosure?
Yes, both a Chapter 7 and a Chapter 13 bankruptcy can immediately stop foreclosure. As soon as a bankruptcy petition is filed with the court, an automatic stay is issued. This stay calls for all collection efforts to stop—including foreclosure. The bank can seek what is known as a motion to dismiss and continue foreclosure proceedings. But, even if the bank does this, you will usually have a delay before your home is foreclosed on. If you plan to keep your home, a Chapter 13 bankruptcy can often help by allowing you to pay off your delinquency over a period of three to five years.
What are Options Other Than Bankruptcy?
People often wonder how to stop bankruptcy—and if there are other options. Here are a few of the alternatives:
- Negotiate with creditors – Some people have luck negotiating with creditors. There are a couple of downsides to this. If you owe a lot of money, then you might not be able to get all of your creditors on board. They are under no obligation to negotiate with you. Also, if you have a wage garnishment or judgment in place then you won’t be able to negotiate your payments without going to court.
- Do nothing – Many people simply do nothing when faced with debt. We cannot recommend this option for a couple of reasons. If you do nothing, then your credit will get ruined. Also, many creditors will not disappear if you don’t pay. They will simply sue you to obtain a judgment and then garnish your wages. A garnishment is a court order that allows a creditor to take money from your paychecks.
To learn more about filing for bankruptcy in California, you need an experienced bankruptcy attorney to help you determine the best options for you. An attorney can review with you what the requirements are for filing bankruptcy in California.
For your free legal consultation, please call Consumer Action Law Group at (818) 254-8413. We can help you figure out solutions to your financial difficulties.