Has a real estate cost gone out of control? Have you lost your income due to medical bills or a wage loss? Have you managed your money more poorly than you’d expected? All of those things can lead toward a need to file a personal Bankruptcy. It’s an option that could leave anyone feeling lost or confused.
You might think that filing for bankruptcy is a dead end street, that it ties your hands and narrows your options. Without the proper assistance of a bankruptcy lawyer, this can even be true. But take it from us that you don’t have to shackle yourself into the worst case scenario – there are options to consider, and some of them are more common sense than you might think.
What Does Bankruptcy Actually Do?
To start with the basics of Bankruptcy, you need to understand exactly what it’s meant to do. The most important facet is that it wipes out unsecured or credit card debt, and in some cases can even affect certain types of loans. The bankruptcy process is designed to provide you room to relieve some of your financial burdens. Additionally, bankruptcy will allow you to get creditors off of your back by suspending collection activities against you.
Bankruptcy does not, however, relieve you from other financial considerations. Bankruptcy, for example, does not always prevent the seizure of property; cannot negate fines issued by local, state, or federal governments (ex. DUI, civil or criminal fines); and does not affect tax debts, alimony, child support, or student loans.
A professional bankruptcy attorney can assist you in uncovering additional details specific to your needs – there are sometimes exceptions to liens and loans or even to what property can or cannot be seized based on the type of Bankruptcy being filed for.
Is Bankruptcy Really What You Need?
Once you have the concept of bankruptcy firmly in mind, you can knuckle down and see whether or not filing for bankruptcy is really called for. Just because you’ve hit financially difficult times doesn’t mean you should necessarily file.
One alternative to filing is to seek out credit counseling. This can often cost money up front, which, understandably, can be a hurdle when considering bankruptcy. However, credit counseling can have significant rewards and ultimately plays an important role in the process of filing should you decide to go through with a filing.
If a shortfall of funds is just temporary (even if it seems dire), credit counseling can solve some problems before getting to a place where you might need to file. Sometimes, with the right counsel, you can work around your debts to begin ameliorating them.
Additionally, many organizations that can assist you with credit counseling are non-profits. This can take some of the sting out of their fees, making it a realistic option if your debt doesn’t look to be as bad as you thought it was.
Another alternative is to enter negotiations with your creditors. Admittedly this takes a bit of leverage from your side. You’ll need a considerable form of income, legal representation and may have to liquidate property or other assets to renegotiate the terms of your debt if you choose this option.
Lastly, you may just need to suspend creditor harassment. It’s not unheard of to experience extreme efforts from creditors to collect debts that are not as pressing as they sound, or to flat out have a collector lie to you in order to get as much money out of their debtors as quickly as they possibly can. You can make the multiple calls per day or empty threats go away simply by knowing your rights, and which types of debts can be managed on terms more advantageous to you.
If Bankruptcy is Called For, How Should You Proceed?
If the alternatives above aren’t possible, then it’s time to admit that you need help. Don’t go it alone – the process is involved and complicated. Professional Bankruptcy Lawyers can help – even if it’s just for a free consultation.
Chapter 13 Bankruptcy is the option to take when looking at the imminent seizure of assets by creditors. If your house is being foreclosed on, if your car is going to be repossessed, if you are being evicted, this is a good place to start if you have some way to begin paying off your debt with a certain level of income. It’s meant to assure you that you will not lose your assets – but it does not clear your debts. It simply restructures them so that you might be able to make good on them on new terms.
Chapter 7 Bankruptcy is the option to use when the seizure of assets cannot be avoided. This route may take your property but will clear you of the debts as mentioned earlier in Bankruptcy 101. It’s a harder road, but again, a professional Bankruptcy Lawyer can help to make the situation less stressful.
Weigh the options carefully and be sure that while you are addressing your own needs to address anyone also involved with you. If you are married, the credit score drops you experience will affect their credit scores as well. Additionally, if you file for bankruptcy, and co-signers on any debts you’ve assumed will shift to them. Bankruptcy will protect you as the filer, but creditors may continue to contact or harass them and are legally able to collect on your debts through your co-signer.
Once You’ve Decided To File, What’s Next?
Filing for Bankruptcy is a challenge to your social, emotional, and financial well being, but it’s not impossible to recover from. The credit effects last for seven to ten years, but there are things you can do to improve your financial situations.
While home loans and start-up costs are probably out of reach, you can still build credit through lower limit credit or store cards, or even through modest car loans. These smaller investments, if repaid in good faith and in a timely manner, can slowly begin to bring up your credit score.
Additionally, you’ll need to keep a close eye on your credit score while you tend to repairing it. Bankruptcy is a long and complicated situation, and sometimes lingering or forgotten debts can remain behind. There are several organizations you can consult with to monitor your credit and to check your credit score for free (up to three times per year).
Contact a Bankruptcy Lawyer
If you are considering filing for bankruptcy, an experienced bankruptcy lawyer can help you find a path to financial security and assist you in finding alternatives to Bankruptcy, or in filing Chapter 7 or Chapter 13 Bankruptcy. The Philadelphia bankruptcy lawyers at Cibik & Cataldo have over 35 years of experience in providing superior, cost-efficient, and value-oriented legal services to all clients. Contact our dedicated legal team at (215) 735-1060 for a free consultation.
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seek bankruptcy protection under federal law