Is bankruptcy right for me?

Bankruptcy can be the solution

As I take down my website, I hope that posting this information from the site might be of help. Note in this blog you will see a discussion of numerous cases over the years that remain important for both consumers and attorneys.

Do I need to file bankruptcy? Should I file bankruptcy? For most people, if you need to ask the question, the answer is probably yes.


But first, consider the following circumstances:

  • Many people struggle a long time paying thousands of dollars just in interest on credit cards without making a dent in the amount due.
  • Recently, by law, the minimum payments have greatly increased making it even more difficult to pay the bills.
  • Are you living pay check to pay check?
  • Are you being harassed by collection agents?
  • Have any lawsuits been filed against you?
  • Are you behind on your mortgage? Has a foreclosure been filed?
  • Are you unable to pay for your necessities?
  • Are you unable to provide for your children as you would like?
  • Have you signed personal guarantees for a business that was forced to close?

Continuing struggles to make payments of debt often only delay the eventual need to file a bankruptcy.

Is it all my fault? Individuals fall behind on their debts for many reasons. Often the debt problems are caused by loss of job, reduction in income, medical bills, divorce, or a failed business. These debts have occurred through no fault of the individual. Even if poor planning might have been a cause of the present problem, there is no reason to continue to make payments into a sinkhole to which no end is in sight.

What about my credit? Won’t my credit suffer? Actually, if you need to file bankruptcy, your credit will usually be better after filing the bankruptcy. You should be able to obtain credit quicker with zero debt than if you still owe thousands of dollars that you cannot pay. You can rebuild credit by continuing to timely pay your mortgage or car loan. You will also be able to obtain a credit card, at least a secured card, which you could pay in full each month and could use for emergencies.

Will I lose my property in a Chapter 7 liquidation? For almost everyone, the answer is no. The law provides that certain property cannot be taken by creditors and may be kept even if bankruptcy is filed. See exemptions

Is bankruptcy for everyone with debt? No. The amount of income compared to the debt might not make it advisable to file a Chapter 7. The individual may own assets which are not exempt and would be lost in a Chapter 7(but not in a Chapter 13)

As an alternative to Chapter 7, your property can be retained in a Chapter 13 payment plan bankruptcy. In a Chapter 13 you might only have to pay a small percentage of the debt, unlike in a credit counseling or debt management plan. You might have transferred property that would create a fraudulent transfer or what is called a preference that could create serious problems by filing a Chapter 7. Any transfers (including out of the ordinary transfers to pay down your home mortgage or into your retirement) must be discussed in detail with your attorney. exempt property list

A chapter 13 might  save your home for foreclosure. Though a work-out with your lender if possible is usually preferable, the filing of a Chapter 13 might be necessary to save your home.  Payments can be made up to 5 years to catch-up on your mortgage.

As I discussed above, a chapter 13 bankruptcy attorney might be able to eliminate your second mortgage or equity line as a lien on your home.  How is this possible?  Basically, if the value of your home is less than the balance of the first mortgage, the second mortgage or equity line can be eliminated as a lien against the property.

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