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Struggling with Debt? What You Should Know to Avoid Making Things Worse…

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Good people find themselves deep in debt for a lot of reasons:  Job loss, health issues, and divorce are common reasons for debt problems.  We see people try all kinds of ways to try to stay ahead.  Here are some things that you should NEVER do:

Do not take out a second home mortgage to pay debts.  This transfers unsecured debts to secured debt attached to your home. If you cannot make payments your creditor will foreclose on your home. It is possible to protect your home in bankruptcy.

Do not pay debts using your retirement savings account.  Retirement accounts are protected through a bankruptcy filing.

Do not max out your credit cards to stay afloat.  Recently incurred charges may not be able to be discharged through a bankruptcy filing.

Do not transfer your home to another person to avoid having a lien placed on your property.  Call us first to discuss any such transfers.

Bankruptcy is not the end of the world.  There are hundreds of thousands of bankruptcy filings in the United States each and every year.

Here are some thoughts of things to do when filing for bankruptcy.

Do consider this decision very carefully.  Under Chapter 7 you will only be able to receive a discharge every 8 years.  There are other options if you have filed within the last 8 years and are struggling.  Contact us for a free consultation.

Do follow the advice of your attorney.  At our office we have over 55 years of combined experience and will be able to guide you to make sure your bankruptcy is as painless as possible.

Do be honest in all of your answers on the petition.  Be sure to list all assets and not leave anything out. We can usually protect your assets with full disclosure and some pre-planning.

Do be sure to list all of your creditors on your petition.

Do close any bank accounts with which you have credit lines or credit cards.  This will prevent the account from being seized by the creditor.

Bankruptcy is a serious decision and should not be taken lightly.  Contact our office for your free consultation to discuss your individual situation to see if bankruptcy is the right decision for you.

 

 

BANKRUPTCY AND DIVORCE

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It is not uncommon to file bankruptcy after a divorce. You or your ex-spouse may not be able to keep up with payments on a single salary. It happens, it’s a legitimate reason to look for relief through bankruptcy.

Money is a big stress factor in many relationships. Sometimes a couple that has money problems will think that the answer to their problems is divorce. Each spouse is likely to believe that the other is mostly responsible for the couple’s money problems. This belief may or may not be true. One thing is true, you can divorce your spouse, but you can’t divorce the debts incurred during your marriage.

When either party contemplates bankruptcy, one consideration is the timing of the filing and whether the parties should file a joint bankruptcy before or during the divorce, or an individual bankruptcy before, during, or after the divorce. Your creditors are not part of the divorce, and the family court cannot alter, modify or revise the contract between debtors and creditors.  Any joint debt discharged by one party will leave the other party solely liable, exposed to collection efforts and law suits, and will often force the other spouse to repay or file bankruptcy.

Both spouses are responsible for the debts incurred during the time of the marriage. Your divorce settlement will divide up the debts, assigning responsibility for some to one spouse and some to the other. But that divorce settlement is between you and your ex-spouse. It doesn’t bind your creditors, who can collect the debt from either of you. This means if your ex-spouse doesn’t pay his or her share of the debts, the creditor can come after you for payment.

HOW CAN I GET STARTED?

Call our office today and set up your free consultation with an attorney. We will discuss which chapter of bankruptcy is best for you.

Bankruptcy can mean different things to different debtors. There are several types of bankruptcy chapters provided under the U.S. Bankruptcy Code, each with its own rules and procedures.

The most common filings for bankruptcy are Chapter 7 and Chapter 13. Chapter 7 will wipe out all your unsecured debt (credit cards, medical bills, utilities, etc.). You can also keep your house and vehicle in Chapter 7, as long as you are or can get current on payments. Chapter 7 is a straight bankruptcy. This will stop all collection proceedings including phone calls, mailings, garnishments and court proceedings. Most bankruptcy filings in the U.S. are Chapter 7. Under a Chapter 7, any debt incurred to a spouse or former spouse that is incurred during a divorce by agreement, decree or court order is not dischargeable.

Chapter 13 is a repayment plan. It is referred to as a wage earner plan. You must have a reliable source of income to repay all or a portion of your debt. Chapter 13 will stop a foreclosure or repossession as well. It is designed to help you retain your home or vehicle if you are behind in payments. You will repay 1% to 100% of your unsecured debt, depending on your individual situation. Repayment will  last a minimum of three and maximum of five years. During this time it will be up to the creditors to file claim in order to be paid during the case.  Under a Chapter 13, the debtor may receive a discharge from obligations incurred as part of the divorce if certain conditions are met.

HOW CAN I GET BACK ON TRACK?

Once you have fully discharged, rebuilding credit can sometimes seem like an overwhelming task. But it’s important to realize that there is life after bankruptcy. Repaying your existing bills as agreed will be one of the single most powerful things you can do to restore your finances and your credit.

FREE CONSULTATION

Contact our office at 513-752-3900 to schedule your free consultation to see if bankruptcy will give you the financial relief you are looking for.