Loss of job and lesser chances of finding a high-paying one are two major effects of unstable economy. Anyone who loses the privilege of earning good income can lose the chance of maintaining his/her life style; it can also affect his/her capability to pay all his/her bills, including credit card billings and other monthly bills. Next to failure in payment of monthly bills is most likely financial worries as this will result to the increasing debts that may soon become hard, if not impossible, to manage.
This is one common situation to thousands of Americans. For like a chronic disease that develops and worsens overtime, so too do debts, becoming too overwhelming and impossible to settle.
After only two to three months of failure to make payments, especially car loans and mortgages, banks and credit card companies would already consider a person’s loan or account as bad debt. This would most likely be referred to a collection agency, which will do anything, even resort to harassing tactics to make a debtor pay.
Crushing debts have caused many individuals so much worry and stress, besides having ruined many families and professional relationships. Debts, however, are not unsolvable problems, for the law offers legal means that will enable individuals with overwhelming debts to address their debts and regain control of their financial situation. One such legal alternative is bankruptcy, a legal declaration of one’s inability to settle personal or business loans. One immediate beneficial effect of filing for bankruptcy is that once it is filed in court, all attempts by agencies to collect debt payments will be stopped (a protection “automatic stay”). Creditors will also lose any right to have a debtor’s salary garnished or his/her bank account levied.
There are different Chapters of Bankruptcies that a person may apply for, depending on his/her financial standing, work or assets and properties. These are
- Chapter 7, also known as liquidation bankruptcy. Through this chapter, a person is enabled to pay his/her non-dischargeable debts through the liquidation of some of his/her non-exempt assets. With regard to business firms, these will need to cease operations, as a court-appointed trustee will need to sell or liquidate their entire assets. Residual proceeds, after having paid all creditors, will be returned to individual debtors or business owners;
- Chapter 11, or business reorganization. The business owner usually acts as a trustee (if the court does not appoint one). He/She also becomes a debtor-in-possession since the law allows continuous operation of his/her business;
- Chapter 12, which is designed for farmers and fishermen with a regular annual income and who own the whole or more than half of the farming/fishing business; and,
- Chapter 13, which allows a debtor to make a three-year or five-year proposal through which to pay his/her debts.
Very helpful information to those with overwhelming debts is shared by the Amerio Law Firm. According to this firm, “When you are facing overwhelming debts and dealing with non-stop creditor calls, filing bankruptcy may be your best option.
The benefits of bankruptcy are clear:
- Completely discharge your unsecured debts through a Chapter 7 bankruptcy or
- Work out an effective repayment plan over the course of 3 to 5 years
- Stop harassing creditor calls
- Stop wage garnishments, bank levies, property liens, and foreclosures
- Get your financial freedom
- Re-build your credit
Bankruptcy can certainly be the financial solution to your current situation. However, if you do not qualify for a bankruptcy, or may be struggling with the idea of filing bankruptcy, an experienced bankruptcy lawyer will be able to provide you alternative solutions, including debt negotiation or tax services.Read More