SHOULD I FILE FOR BANKRUPTCY?

Filing for bankruptcy always is a personal decision that is based on your own specific circumstances.  While a number of factors should be considered, your decision to file bankruptcy will be most influenced by the amount of debt that you owe and your ability to repay it in the near future.

Bankruptcy may be particularly helpful to you in any of the following situations:
  • You have a large number of dependents.
  • You are older in age.
  • You have a large amount of dischargeable debt.
  • You have a small amount of savings and assets.
  • You can’t pay your debts.
  • You’re receiving telephone calls from collection agencies demanding payment.
  • Your home is in foreclosure.
  • You’re in danger of losing your business.
  • You’re being sued by one of your creditors.
  • Threats of garnishments, repossessions, foreclosures, liens, and general harassment by creditors may lead you to the decision that bankruptcy is in your best interest since the primary purpose of bankruptcy is to protect you from your creditors and provide relief by giving you an opportunity to reorganize or eliminate your debt.  If possible, it is better to file for bankruptcy before these types of collection activities force you to rush into filing a bankruptcy case.  Even if you could eventually pay off all of  your debt, you still may choose to file bankruptcy since you can use your future income to save for your long-term goals instead of paying off old debt.  You also may file for bankruptcy to provide relief from the emotional distress or depression that is commonly related to debt.

Bankruptcy can particularl;y help some people:
Bankruptcy offers the most benefits if your wages are being garnished, your home is in foreclosure, your vehicle is about to be repossessed, or your driver’s license is suspended because of an accident that was not alcohol or drug-related. The filing of a bankruptcy case can stop a court ordered garnishment, stop a foreclosure proceeding, save a car from repossession, recover a vehicle that was repossessed, and get your driver’s license immediately reinstated.

Bankruptcy checklist: If one or more of the following applies, you immediately should contact a bankruptcy attorney to discuss your options:
  • A creditor garnishes your wages or freezes your bank account.
  • Your mortgage company files a foreclosure proceeding against you.
  • Your auto lender threatens to repossess or already has repossessed your car.
  • Your driver’s license is suspended because of an accident or parking tickets.
  • You have a large amount of unsecured debts, such as credit cards, medical bills, repossessions, broken leases, utility bills, etc.
  • You cannot afford to repay all of your consumer debt over the next five (5) years.
  • Collection agencies and creditors call you at home or at work.
  • Your payments are more than 30 days behind on two (2) or more bills.
  • Your creditors file collection lawsuits against you.
  • You cannot pay large medical bills not covered by your health insurance .
  • You owe income taxes, student loans or government fines that you are unable to pay in one (1) lump sum.
  • Your debt total remains the same even though you are making payments.
  • You recently lost a source of income necessary to repay your debts.
  • You either are left with all the debts or can’t afford to pay your debts because of the loss of a portion of your household income after a divorce or separation.

                                                                 

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BANKRUPTCY IS NOT ALWAYS RIGHT FOR EVERYONE

Below are some examples where bankruptcy may not be the best option for your situation:

You own assets and/or can repay your debt
If you own stocks or other investments, significant equity in your home, or savings that you could use to repay your debts, or you have a large enough disposable income to repay all your debts in the near future, you may not need to file for bankruptcy.

You are “judgment proof”
You may not have any wages or property that your creditors would be allowed to take from you. People who fit this description often are referred to as “judgment proof.”   “Collection proof” would be a better description, because your creditors can still file a lawsuit and obtain a judgment against you; they just cannot enforce the judgment against you and collect any money.  “Judgment proof” individuals are typically senior citizens on a fixed income who do not own many assets or a home. However, even if you are considered “judgment proof,” reviewing your bankruptcy options can be helpful to stop future lawsuits or creditor harassment.

You defrauded your creditors
Bankruptcy law was created for honest people who need the help of the Bankruptcy Code to get a fresh start. If you have purposefully engaged in activities to either hide your assets or defraud your creditors, such as the recent transfer of assets to your family or friends to hide them from your creditors or lying on a credit application about your income, a bankruptcy may not be your best course of action.

You recently incurred debts for luxury purchases
If all of your debts are a result of a recent luxury spending spree, filing for bankruptcy may not help your situation. Most luxury debts incurred just before filing bankruptcy are not dischargeable if the creditor objects. However, if these luxury debts are not recent or intentionally fraudulent, you may be able to eliminate them in a bankruptcy case.

You expect to incur more debts for future necessities
If you expect to incur more debts for necessities, such as upcoming medical costs for an illness or medical condition, consider delaying filing for bankruptcy until all your upcoming debts have been incurred. Debts incurred after filing for bankruptcy cannot be included in your bankruptcy.

A friend or relative cosigned a loan for you
Anyone who cosigned a loan or otherwise took on a joint obligation with you can be held wholly responsible for the debt if you file for Chapter 7 bankruptcy. However, you may be able to protect a cosigner in a Chapter 13 bankruptcy.

You previously received a bankruptcy discharge
You can’t file a Chapter 7 bankruptcy if you previously obtained a Chapter 7 discharge within the past eight years. In this situation, Chapter 13 bankruptcy may be available to you.

Your previous bankruptcy case was dismissed
You may not be able to re-file a bankruptcy if your previous bankruptcy was dismissed within the past 180 days for violating a court order or you requested the dismissal of your bankruptcy after a creditor was granted relief from the automatic stay.
THE METRO EAST BANKRUPTCY LAWYERS
Lathram & Herbert, LLP
It doesn't matter where you live in the Metro East area - Alton, Belleville, Collinsville, Columbia, East St. Louis, Edwardsville, Fairview Heights, Freeburg, Granite City, Highland, Lebanon, Mascoutah, O'Fallon, Pontoon Beach, Scott Air Force Base, Shiloh, Swansea, Trenton, Troy, Waterloo, Wood River - we'll help you regain control of your financial life.  So, why wait any longer?  Your fresh start is just a telephone call away.