Many times people come to me asking how they can get rid of their debt. It is hard to say without fully knowing someone’s circumstances how and if someone can get out of debt. But one way individuals often over look to help get out of debt, is filing bankruptcy. Many people hear the term bankruptcy and automatically assume the worst. Bankruptcy, however, may be ideal if you just are not able to make ends meet and keep digging yourself deeper in a hole.
What is Bankruptcy Law?
First, let’s look at the purpose of bankruptcy. Bankruptcy according to the case Local Loan Co. v. Hunt bankruptcy is defined as a way to “give the honest but unfortunate debtor.. a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Many people who face immense amounts of debts for whatever reasons, are just simply not able to pay them back. Bankruptcy gives people a fresh start so that they can begin their life over.
Many people are under a misguided impression that when you file for bankruptcy you can never get credit again or buy a house. However, that is simply just not true. There are thousands of people I see that file bankruptcy each year. Bankruptcy is not supposed to be a way to hinder you but, a tool that can be used to help you. Bankruptcy has helped many people who have faced divorce, addiction, medical bills, repossessions and allows them to regain control of their life and start over.
What Steps Should I take to Get Rid of My Debt?
If you are not able to make monthly payments and you do not see any way out in the near future you should contact a bankruptcy attorney and see what options may be right for you. Many people assume that if they contact a bankruptcy attorney they will lose all of their property (ie. House, car etc.) This is not always the case. Many people do not know that there are many exemptions that can be used to exempt property. Thus, in many cases you can file for bankruptcy and still keep many of your assets such as your vehicles, property, jewelry etc.
Don’t think About Debt Consolidation or Debt Settlement Yet
Sometimes people go straight into looking at companies who offer debt consolidation plans and debt settlement plans. Many people assume that bankruptcy should be a last resort. Although sometimes debt consolidation and debt settlement plans are not the best option. It is important to understand that many of these companies are not regulated. Thus, many take your money and pay themselves first before they pay your debts. This means that creditors will still go after you and begin to sue you and get judgments against you. Another thing to note is that many of these companies close down and you have no recourse when that happens. It is important to really sit down and make sure you are not being scammed. I have seen many clients come to me after months of working with debt relief companies in the same place they were before.
Benefit of Filing Bankruptcy
One benefit of filing for bankruptcy and not working with some of these debt relief companies aside from, hopefully not being scammed is that you can actually begin to save and not spend years paying off debts. Many people think that filing bankruptcy ruins your credit however, in some situations your credit score may actually go up. In order to understand this you need to understand how credit reporting agencies calculate your credit score. Credit agencies look at your debt to income ratio thus, if you are someone who has racked up thousands in debt then your credit score may go up after filing bankruptcy because you no longer have any debt.
Speak With a Debt Professional
If you are in debt and need help it is important to contact a bankruptcy lawyer that can provide you with different options. Karra L. Kingston is a bankruptcy lawyer in New Jersey and New York. She has helped many people eliminate their debt and start over. Call today for a free initial consultation.