Should You File For Bankruptcy? Know Why And When In Experts’ Words

Should You File For Bankruptcy? Know Why And When In Experts’ Words Most buyers experience an immense holiday-shopping hangover which no amount of comfort food or aspirin can alleviate. We, humans, always fail to set aside the gift money beforehand, which leads us to use the credit card until it’s dry and dead. People, who are in severe financial pain, look into filing for bankruptcy for quick relief.

Despite the usual stigma, declaring bankruptcy has always yielded advantages for some people. For instance, bankruptcy completely eliminates certain debts, might also help you hang onto your house and other assets. However, filing for bankruptcy has its price, which is far better than the mental stress and harassment you have been taking from your creditors over the years.

When to Consider Filing for Bankruptcy If you just sit to browse the Internet for 30 minutes, you will come up with numbers of good-to-contact law firms that will not only tell you when and why you should file for bankruptcy but also help you with all legal formalities and procedures until you settle – and they are called bankruptcy attorneys. You have missed mortgage (or multiple mortgages) payments, using another credit card to pay for the previous and the like – these financial situations in your life sure suggest you file for bankruptcy. However, a good attorney will always try to look on the alternative, which is if you could manage to pay off your creditors, which in most financial distress cases doesn’t seem possible.

Here are some of the basic factors one should consider with their attorneys before actually filing for bankruptcy – You can calculate your total amount of debt that can be eliminated. Following this, divide the value into a total of 24 monthly payments. Now, figure out if you could pay the amount in the next 24 months. In most financial distress cases, people can’t pay the entire amount they thought they could earlier, leading themselves into more sufferings and financial pain. Most attorneys use a two-year timeframe, simply because that’s how long it takes to reform one’s credit score if the bankruptcy goes through successfully. In some cases, debtors try to strike a deal with their creditors, so they could either reduce the interest rate or the amount owed. However, this does not come out as a success in most cases.

To spare yourself more suffering and head-banging, attorneys recommend you file bankruptcy.

Is declaring bankruptcy worth the expense?

For individuals with multiple missed mortgage payments and credit card bills, declaring bankruptcy is surely worth the expense. Here’s the bankruptcy cost breakdown: •

Filing fee is about $300

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Bankruptcy lawyer fee is between $1,000 and $5,000

Now compare these costs with: •

Hiked insurance rates (homeowners, health, auto, etc.)

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Negative impact on your credit score

Now, many might suggest you wait and figure out how you can pay off the debts because bankruptcy is something not good. Well, bankruptcy becomes the last resort, when you have no other options to come out of the debt misery and rebuild your credit score again. Life doesn’t end today, nor will it end tomorrow. With a growing family, your expenses grow too, meaning you will need financial backup to support your children’s college education, medical insurance premiums, many unpredictable celebrations, festivals, and new add-ons to the family and more. Filing for bankruptcy will clear your way to think and start afresh, with a chance to qualify for loans again.

Trying to save your house from the foreclosure?

If the foreclosure threat is real and imminent, bankruptcy is 99% is the only way to save it for you. For instance, if you are holding substantial equity in your home, it’s always worth saving it by filing bankruptcy. Usually, in case you are no longer able to pay your mortgage, and your creditor has already sent you a notice for foreclosure, you can put a halt on the process by declaring bankruptcy before the right before the day of the sale. When you stop the foreclosure, it although buys you some time, however you are still on the hook for your missed mortgage payments. This is where a bankruptcy attorney comes to your rescue.

Have the lenders started garnishing your bank funds and wages?

Estimate how much of the total garnishments are likely to dig into your capability to stay afloat. In case you can’t afford to even a quarter of your paycheck to your lenders, it’s wiser to file for bankruptcy. It will stop them from garnishing your wages or any bank funds. Once you have declared bankruptcy, even before the court approves your filing, an “automatic stay” immediately goes into effect. This notifies the lenders to stop the garnishment or contacting you at all in order to threaten you to seize your assets.

You cannot be contacted by any creditor for that matter. It’s more like getting back on your feet.

Have you personally been served a lawsuit by the creditor?

If this takes place, you are suggested to act as fast as possible, because if any creditor personally serves you a lawsuit, it is most likely that you will face 25% garnishment of your bank funds/wages in as little as 45 days. We recommend you contact a bankruptcy attorney as soon as possible and be guided on how to act in this situation. If you plan to simply ignore the lawsuit, you are likely to be served a default judgment that will legally grant a lender’s permission to garnish your bank account or wages or file a lien on your house. Surveys show that people often do the blunder by ignoring the lawsuit because they realize that they already owe. This is an irreversible mistake. You are simply ignoring the procedure in place aimed to protect you.

Types of debts that can be eliminated through bankruptcy A bankruptcy discharge relieves you from being liable to repay certain debts, but not all debts can be cleared through bankruptcy. The most common debts that can be eliminated through bankruptcy include: •

Credit card debt

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Medical bills

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Payday loans

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Also, deficiency judgments on foreclosures and repossessions

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Landlord-tenant judgments (including back rent and damages)

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Utility and Phone bills (for the companies you are no longer associated with)

Types of debts that cannot be included here are tax debt or student loans. Bankruptcy, however, can substantially cut down on what you already owe to the IRS and completely eliminate tax-related interest, tax debt, and penalties evaluated by tax authorities more than 3 years ago.

Where do you find financial help?

Loaning money is always tough, however the sooner you look for a solution, the better. Start a free bankruptcy consultation with an attorney to figure out your current financial condition and get a sense of whether or not bankruptcy is the last resort for you.

Recovery Law Group – one of the largest and widely trusted consumer law firms in the United States recommends you consult with a bankruptcy attorney before you decide your next financial move. When you consult with a bankruptcy attorney, you can rest assured that you are going the right path and solution is will come through. Bankruptcy is a big decision and you must not proceed unguided or unassisted.