Bankruptcy is a major step for any individual. The process is complicated and time consuming.
Why choose bankruptcy? In many cases it’s a necessary step toward getting on with your life, the only solution to serious financial ordeals.
Here is a look at some considerations in deciding if bankruptcy is right for you.
Start with How Much Debt Do You Have?
“How much debt do you have?” Though credit reports are not definitive listings of all debts, they are a useful starting report. It costs nothing to request an annual free report from each of the three credit bureaus: TransUnion, Equifax and Experian. The place to go is www.annualcreditreport.com. Avoid sites that promise a “free report.” They’ll bait and switch on you and push products you don’t need. If you find the credit report to be confusing, then don’t fret: we’ll break its meaning down for you. Can You Pay Your Debt?
It’s sounds obvious, but sometimes it’s missed. Distill the problem and ask yourself: Can I pay my debts while still providing for my family (and/or myself)? If you hesitate to answer “yes,” if the answer is possibly “no,” then it’s time to take action. Don’t continue to suffer. second step in assessing your finances, is keeping it simple In many cases, it is possible to slowly but surely dig yourself out of the financial morass you find yourself in. There is help available. Counselors can work with you to put together a strict budget and establish a payment plan with your creditors.
The “Judgment Proof” Fallacy
If you have no assets of value and your only income derives from protected sources such as Social Security, you might consider yourself “judgment proof.” You’re not. Creditors will continue to harass and sue you, even if they cannot execute upon judgments. Many retirees who don’t own homes or valuable assets still find relief in filing bankruptcy.
What Bankruptcy Accomplishes
In a nutshell, bankruptcy achieves the following: eliminates most types of debt (even many tax debts) under chapter 7 of the bankruptcy code (United States Code Title 11), using a form called Chapter 7: under chapter 7, you don’t pay your creditors
Eliminates most types of debts under chapter 13 of the bankruptcy code: you would generally pay a small fraction of your debts and the balance would be forgiven.
Does Bankruptcy Get Rid of All Your Debts? For public policy reasons, certain debts cannot be cancelled in bankruptcy:
Domestic support (e.g. child support and alimony) are excluded
- Student loans (with very rare exception)
- RecentTaxes
A qualified bankruptcy attorney will assess the types of debt you have and advise you if they are subject to “discharge” (cancellation or forgiveness) in bankruptcy. Don’t guess: seek expert advice. Bankruptcy attorneys may provide free or no-obligation consultations and there’s nothing to lose by exploring your options.
Certain Effects of Bankruptcy
Home. If you file for Chapter 7, your home may be exempted (protected from being sold to repay your creditors) within certain limits of equity. If you have “too much” equity, then you can opt instead to file chapter 13, make payments and avoid loss of any property.
Pensions. Pensions and retirement accounts are fully protected in bankruptcy with very-limited exception. A mistake often made is to try to pay down debt by exhausting the funds you’ve set aside to see you through retirement. Instead, by filing bankruptcy, you can obtain forgiveness from debt, while keeping your retirement assets.
Co-Signers. If you have co-signed debt, bankruptcy will not relieve the co-signer from his or her obligation. However, if your spouse is your cosigner, their income will be protected from creditors, even if they don’t file bankruptcy.
Trust Professional Experience
Being saddled with debt is emotionally draining. You need the best legal advice to decide whether to file bankruptcy to eliminate the stress. You also need the best legal representation if you decide to file bankruptcy. Bankruptcy is a complicated, tricky legal specialty. In San Diego, people have come to trust the Law Offices of Asaph Abrams, with over 700 successful bankruptcy filings. The focus of Asaph Abrams is positivity during the very stressful bankruptcy proceedings. He has earned a reputation for diligence and devotion to his clients.
Asaph Abrams has been a member of the California Bar since 2002 and is authorized to practice in both federal and state courts.He was named 2014 co-chair of the San Diego County Bar Bankruptcy Law Section. He is also a member of the National Association of Consumer Bankruptcy Attorneys and the San Diego Country Bar Bankruptcy Lawyer Referral Panel.
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