Most individuals ask “what is bankruptcy?” Bankruptcy is defined as a legal proceeding involving a person of business that is unable to repay outstanding debts. Many believe that bankruptcy is only used when individuals make bad financial decisions. Although, yes that may be true, bankruptcy, is also a tool to help individuals get out of debt and start over. There are many different reasons why individuals file bankruptcy. Not everyone files bankruptcy because they have made poor financial decisions. Below we will discuss some of the reasons why individuals file bankruptcy.
File Bankruptcy Because Of Medical Debt
The number one reason individuals file bankruptcy is to eliminate medical debt. Medical debt can cause severe hardship for an individual’s financial situation. In many instances, individuals who have medical issues may be out of work and lose their income sources. When this happens, it can be extremely difficult to stay up to date on credit card debt.
Chapter 7 bankruptcy to get out of Medical Debt
Filing a Chapter 7 to get out of medical debt can be a great tool. When an individual files Chapter 7 bankruptcy, their debts are eliminated. This means creditors are no longer paid back. Wiping out medical debt in a Chapter 7 bankruptcy can allow individuals to save their money and start over. The Chapter 7 bankruptcy process is fairly quick and individuals can begin rebuilding their credit right after they receive a bankruptcy discharge.
File Bankruptcy Because of Divorce
Many individuals who file bankruptcy, do so because they are no longer with their spouse. Getting divorced can be a huge financial strain on a person. Many individuals who get divorced lose half of their income which can be detrimental to their financial situation. Getting divorced and filing bankruptcy to help start over, can be extremely beneficial. Filing bankruptcy is never an easy decision. However, if individuals have debt because of their ex-spouse, filing bankruptcy can be a way to eliminate the debt and start over fresh.
File Bankruptcy Because of Unemployment or Loss of Income
Unfortunately, things that happen in life are not always foreseeable. Individuals who lose their job or are on unemployment, often file bankruptcy to help them get rid of their debt. Individuals who lose their job or source of income must speak with a bankruptcy lawyer as soon as they lose their job. Many individuals fall behind on their bills while unemployed, and wait until they have a new job to file bankruptcy. Often, individuals believe they may be able to catch up on their debts once they have a new job. Unfortunately, many times, individuals are not able to catch up and they don’t qualify for bankruptcy once they have a new job. Speaking with a bankruptcy lawyer is free and should be done as soon as the individual loses their job or is on unemployment.
File Bankruptcy To Get Out Of Business Debt
Small businesses make up most of America. Individuals can often find themselves in bad financial circumstances when a business is not making profit. Filing bankruptcy to wipe away business debt may be feasible for people. Businesses have different chapters of bankruptcy that may be feasible. Individuals who are strugging with businesses expenses and debt should speak with a bankruptcy lawyer immediately.
File Bankruptcy Because of Foreclosure
Individuals often file bankruptcy because they have fallen behind on their mortgage. Filing bankruptcy can stop a foreclosure sale the day of. Moreover, bankruptcy can allow individuals a way to catch up on their mortgage payments. Bankruptcy provides different protections so individuals can keep their homes. One of the most common ways individuals can keep their homes in bankruptcy is by applying for a loan modification.
Applying for a loan modification in bankruptcy
Applying for a loan modification in bankruptcy can help individuals and the bank work together to come up with an agreement. A Loan modification in bankruptcy is overseen by a judge, this makes sure that the loan modification is fair. In some instances, the judges try to push the bank to give individuals loan modifications. Individuals should speak with a bankruptcy lawyer if they are in foreclosure. An attorney can review their financial circumstances to determine if a loan modification will be feasible.
Chapter 13 to Stop Foreclosure
A Chapter 13 bankruptcy can also be another way to stop a foreclosure. In Chapter 13, bankruptcy individuals can pay their arrears over a 3-5 year repayment plan. A Chapter 13 bankruptcy can allow individuals time to catch up on their past-due mortgage payments.
File Bankruptcy To Get Out of Credit Card Debt
Filing bankruptcy to erase credit card debt is very common. Many individuals get in over their heads with credit card debt. Many credit card companies, give great incentives for people to charge up their credit cards. When this happens, individuals don’t realize how much interest rates add to their credit card balances. Unfortunately, for many individuals, credit card debt can be hard to get out of. Bankruptcy allows individuals to wipe out their credit card debt and start over.
File Bankruptcy To Stop a Car Repossession
Individuals who fall behind on their car loans can use bankruptcy to catch up on their car. Bankruptcy provides different options to allow individuals to keep their vehicles or catch up on payments to their lenders.
Chapter 13 bankruptcy
Filing a Chapter 13 bankruptcy, to catch up on payments can be a great tool. In Chapter 13 bankruptcy, individuals can keep their car by repaying their past due payments in a repayment plan. Speaking with an attorney who can see if an individual would be able to afford a Chapter 13 bankruptcy is vital.
When to Consider Filing Bankruptcy?
Filing bankruptcy is never an easy decision for anyone. However, it could be the best decision for individuals in debt. Bankruptcy is a powerful tool that stops creditors from being able to garnish wages, foreclosure, and commence lawsuits. When individuals file bankruptcy an automatic stay begins. The automatic stay prevents creditors from going after individuals as soon as their case is filed. Any creditor that disobeys the automatic stay can be fined.
Filing bankruptcy can allow individuals to start their lives over. Without carrying debt, individuals can begin putting money away. They can also begin rebuilding their credit. Individuals who file bankruptcy can have perfect credit within two years of filing.
Individuals thinking about filing bankruptcy should hire a lawyer to help them. Bankruptcy rules can be confusing. Karra L. Kingston Esq. is a bankruptcy law firm in Staten Island, New York, and New Jersey. Karra helps individuals file Chapter 7 bankruptcy and Chapter 13 bankruptcy.