Many people who can’t afford to pay their debts need to file for bankruptcy. Many times, individuals who are choosing between paying their rent or their credit cards are people who are considering filing for bankruptcy. Bankruptcy is a tool that can help individuals get out of debt and start over. Below, we will discuss when bankruptcy may be a good option to consider helping eliminate debt.
Wage Garnishment
Individuals who have fallen behind on their debt are often faced with debt collectors suing them. When individuals can’t pay their debts, debt collectors will go to court and sue the individual for the unpaid debt. When this happens, individuals either need to respond to the court action or settle with the debt collectors. When individuals fail to respond to a debt collection lawsuit, the court enters a default judgment against them. A default judgment allows a creditor to pursue the individual for the outstanding debt. This means the creditor can garnish an individual’s wages.
A wage garnishment is where the creditor sends a notice to the individual’s employer requesting that they hold a portion of their pay until the debt is paid off. In New York and New Jersey debt collectors can garnish up to ten percent of an individual’s wages.
Filing for bankruptcy can be a way to a eliminate a wage garnishment. When an individual files for bankruptcy, an automatic stay goes into place. This tells the debt collectors that they are not allowed to continue to pursue the debt against the individual. This means all wage garnishments must cease. If a creditor continues to garnish wages after a bankruptcy has been filed, they can be sanctioned with penalties.
Debt Consolidation or Debt Settlement
Individuals who are looking to take out more loans to pay off their current debt are usually good candidates for bankruptcy. Generally, people with high credit card debt, should consider bankruptcy before taking out another loan. Many times, individuals end up taking out another loan and then default on that loan. To be sure that you can afford to make payments on another loan it is important that the individual go through their income and expenses. Many times, individuals forget to plan for rainy days and end up in the same position that they were in after taking out a new loan. Moreover, many debt consolidation and debt settlement companies can’t settle certain types of debts. Therefore, it is imperative that individuals who are considering these options figure out how much they have to pay into debts that are not part of a debt consolidation or debt settlement process.
Vehicle Repossession
Since the COVID pandemic, car prices have risen tremendously. Many car dealerships have been selling high loans to individuals who may not be able to afford the loan. Bankruptcy is an option to consider if a vehicle is being repossessed or you have fallen behind on a payment. In some cases, bankruptcy can allow you to negotiate with the creditor to pay the actual value of the vehicle. It can be hard for many people to come up with these funds. However, for some people it can be an option.
Foreclosure
Individuals who are behind on their mortgage payments should consider bankruptcy as an option. Bankruptcy can allow individuals a way to catch up on their mortgage payments. Throughout the pandemic, many people deferred their loans because they lost their job. Bankruptcy can allow people to catch up on their monthly payments by going into a Chapter 13 repayment plan. Filing a New York bankruptcy or a New Jersey Bankruptcy, can help an individual get out of foreclosure and save their home.
Individual’s who are facing financial distress should consider speaking with a bankruptcy lawyer sooner, rather than later. While bankruptcy isn’t a decision that should be taken lightly, it may be the best decision for some people to help them start over.
A New York bankruptcy attorney or New Jersey bankruptcy attorney can help review your financial situation and determine what the best option is for you.
Karra L. Kingston Esq. provides free consultations which you should take advantage of. We can help you get out of debt so that you can start over.