Man sitting in chair worried about money thinking of bankruptcy

What is bankruptcy?

Bankruptcy is a legal proceeding for individuals or businesses when they incur debt beyond their ability to pay back. When this happens they are asking for the courts to either wipe out their debt or help them consolidate and negotiate the cost down. Bankruptcy is sometimes seen as a bad thing however life can throw you curve balls and some financial decisions are made out of desperation and need. 

Should I file for Ch. 7 bankruptcy?

People file bankruptcy all the time for many reasons. Whether you should or shouldn’t file will ultimately be a personal decision but there are plenty of factors to consider. Depending on your debt to income ratio, you might not want to file bankruptcy however if you are having issues financially and your current income isn’t helping you keep up with the mounting debt then you may consider bankruptcy. Ask yourself, are there things you want to keep such as a car, house, or other belongings? Can you afford to keep up the payments on your various belongings? Can make adjustments to your budget? Answering these questions might offer you insight on where you actually are financial. 

What are my debt relief options?

There are many options available if you want debt relief. There are companies willing to work with you and consolidation might benefit you.

  1. You can negotiate with your creditors. Many times if you are behind on payments your creditor will work with you on payment plans or allow you to negotiate a large debt to a small lump sum.
  2. You could look into debt management options. There are companies designed to help those in debt manage their finances and negotiate with those creditors on your behalf.
  3. You could take out a debt consolidation loan. With a debt consolidation loan, you can negotiate certain debts down to large amounts and then pay them with the loan. This option lowers the debt and turns it all into one monthly payment for your convenience.
  4. The last and more extreme choice is bankruptcy. You might consider selling some property to pay on some of your debts and then contact a bankruptcy attorney to help guide you through the bankruptcy process.

Does credit counseling help?

Credit counseling is a beneficial tool for understanding the impact of certain financial decisions. And is a necessary step when filing for bankruptcy. When you file for bankruptcy you are required to complete two financial management courses. Doing some credit counseling before filing can show you where you stand but isn’t necessarily a way to avoid bankruptcy. However, doing regular credit checks and budgeting is a great way to keep your finances from getting out of your control. 

What can I gain by filing for bankruptcy?

Once you file for bankruptcy and it is granted depending on the type of debt you had you will be debt-free. This is a relief for anyone that understands the distress that comes from debt and dealing with the stress that occurs when working through it all. 

Will the bill collectors stop calling me?

As long as you have added all your creditors, an automatic stay is put into effect once you file bankruptcy. Creditors can no longer contact you to collect the debt during the bankruptcy process. If you have filed bankruptcy and a creditor continues to contact you in an attempt to collect their debt contact your attorney immediately and they will notify the Trustee.

Does this mean I can’t buy a house or get a line of credit?

The bankruptcy public record is deleted from the credit report either 7 to 10 years from the filing date of the bankruptcy, depending on the chapter you filed. When you file for bankruptcy it will show up on your credit report when you attempt to purchase anything but it will not necessarily prevent you from applying for lines of credit or a home loan. Many people get a fresh start when they file for bankruptcy and go on to have much better credit scores than they had before filing for bankruptcy.

Can I file for bankruptcy more than once?

As of now, there are no limits on the number of times you can file and receive a discharge from bankruptcy, what there is a limit on is how often you file. For chapter 7 bankruptcy you will have to wait at least 8 years before you file bankruptcy again. There are some exceptions to this rule but they generally involve filing a different chapter bankruptcy. If you feel like you may need to file again sooner than 8 years look into some other debt-relief options

Do I need an attorney to file bankruptcy?

Short answer no, but you really shouldn’t. Like with most legal issues you have the right to file and represent yourself, however, representing yourself is not easy you will be expected to understand and know the rules as if you were an attorney. This is because most courts don’t have the time or resources to explain the process with you, what you should be filing when you should be filing it and they definitely cannot interpret the law for you. This is why it is almost always in the best interest to hire an attorney.

Contact our office today – online or by phone (817)841-9906, for your free consultation. We will assist you in analyzing your financial situation to determine your options.

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