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Is Filing for Bankruptcy the Right Option?

When Should I Consider Bankruptcy as an Option?

Bad things do happen to good people. If you are overwhelmed with debt, to file bankruptcy may be a wise choice.  While our law firm specializes in bankruptcy, we can assist you with nonbankruptcy options, or will refer you if better nonbankruptcy options are available.   There are multiple reasons to consider bankruptcy as an option such as:

  • 1) Lowering monthly payments on such debts as auto loans, but still be able to retain the vehicles;
  • 2) Getting a fresh start with little or no debt remaining;
  • 3) Re-establishing credit.
  • 4) Stopping collection activity such as garnishment and/or repossession.

Signs that tell when you may need to file bankruptcy:

  1. More than one month behind on mortgage;
  2. Behind on vehicle and unable to catch up;
  3. Unable to meet your basic monthly expenses, such as groceries, housing, transportation, and
    utilities, without using credit to make your expenses;
  4. Taking cash advances, payday loans, title loans or other high interest loans;
  5. Major loss of income, or unusually high increase in expenses such as medical bills;
  6. Tax debt that can’t be paid off within 12 to 24 months;
  7. Unable to afford to make more than the minimum payments on your debt;
  8. Losing sleep or suffering extreme anxiety due to worry and stress over money;
  9. If you have received a notice that your home is going to be foreclosed;
  10. If you have received a notice that your car is going to be repossessed.

Bankruptcy can stabilize your finances, and while a bankruptcy filing may decrease your credit score, it is no worse than multiple charge-offs, repossessions or a foreclosure that continue to be reported to the credit bureaus each month.  And since the other types of reporting on your credit bureau report can continue and the reporting of the bankruptcy is only entered as of the date of the filing and discharge, in many cases a person can re-establish his/her credit faster with a bankruptcy filing and a fresh start.  In situations where a person has many of the above entries on his/her report, his/her credit score can rise above the pre-bankruptcy level in a short time after completion of the bankruptcy proceeding.

The timing in filing your bankruptcy is of critical importance for several reasons. Regardless of whether you file a Chapter 13 or a Chapter 7 bankruptcy case, the last 6 months of income (not counting the month of filing) is extremely important. If you get bonuses on an irregular basis, you may need to file either before or after a bonus in order to maintain your eligibility. Another illustration of the importance of timing is certain rules on the dischargeability of debts arising from cash advances or luxury purchases made immediately before bankruptcy is filed. A bankruptcy attorney knowledgeable in these rules will look at these details and help you determine the most favorable timing for you.  As an attorney certified as a specialist in Consumer Bankruptcy Law by the American Board of Certification and an attorney recognized as a super lawyer by Mid South Super Lawyers, I stay on top of the changes in the law to insure that I can help you make the right decision for you.

How can filing Bankruptcy help me and my family?

In most cases, the bankruptcy can assist someone in the following ways:

  • 1.  Bankruptcy can give your family a chance to start over and regain financial stability.
  • 2.  Bankruptcy can allow you and/or your family to repay a portion of your debts and still retain your home, cars, personal property and dignity.
  • 3. Bankruptcy can eliminate most debts, and for many people can eliminate all of their debt.
  • 4. Bankruptcy can stop a foreclosure of your home or other property.
  • 5. Bankruptcy can stop auto repossession and if your auto has been repossessed recently, Bankruptcy may allow us to have your auto returned to you.
  • 6. Bankruptcy can stop wage garnishment.
  • 7.  Bankruptcy can stop IRS or state tax levies.
  • 8. Bankruptcy can stop the termination of utility services.
  • 9. In some cases, bankruptcy can be the fastest way to re-establish credit.

There are some exceptions to the above matters, including but not limited to the following:

  • 1.  The continuance of a court proceeding to determine child custody, visitation, the dissolution of a marriage, the determination of property division in a divorce, the establishment of the amount of child support or alimony, and/or the resolution of a matter involving domestic violence.
  • 2.  Collection of of child support actions, such as: 1) the interception of a person’s tax refund, 2) the suspension of a persons driver’s license, 3) the garnishment of a pay check, and/or  4) the withholding of a up to 50% of social security benefits.
  • 3. The commencement or continuance of a court proceeding of a criminal action or proceeding.
  • 4. The collection of restitution ordered in a criminal proceeding.