As bankruptcy lawyers know, bankruptcy is always a challenging choice for people. When debts are mounting and creditors are calling relentlessly, a person with obligations may feel overwhelmed and uncertain about the future. Amidst this turmoil, the team from The Law Offices of Neil Crane will share that Chapter 7 bankruptcy may offer an appropriate path toward financial relief and a fresh start. The following are common signs that bankruptcy should be a consideration for those who are desperate for relief:
Debts Are Unmanageable
When debts are so significant that a debtor’s ability to pay them off may no longer be realistic, bankruptcy may be the most appropriate path forward. Accessing Chapter 7 as an option can allow debtors to erase many unsecured debts such as credit card debt, medical bills, and personal loans. If the debt is so high that even with a financial plan, budgeting, and additional income, it will take years to pay off, bankruptcy could provide a way out.
Lack of Assets
Chapter 7 is commonly referred to as a “liquidation bankruptcy.” Through this process, the non-exempt property is sold to repay creditors, while the exempt property is protected. You won’t lose much if you have few non-exempt assets (like expensive jewelry, a second home, or valuable collections), and Chapter 7 could be a good option.
Constant Calls from Creditors
When a person cannot pay their debts, creditors will begin to reach out in attempts to settle debts. As a result, debtors may experience persistent calls, letters, and threats of legal action from creditors, which can be distressing. Filing for Chapter 7 bankruptcy results in an “automatic stay,” which stops most collection efforts. If creditor harassment is disrupting your life, bankruptcy might offer relief.
Risk of Foreclosure or Repossession
If you risk losing your home, car, or other essential property, bankruptcy can give debtors the automatic stay. While Chapter 7 doesn’t permanently stop foreclosure or repossession, it can give you time to figure out a plan.
Some may be at risk of having their wages garnished in a creditor’s efforts to repay debts. When a debtor files for Chapter 7, the automatic stay is granted, and attempts to collect debts are halted. Losing a significant portion of your paycheck to creditors can make meeting your other financial obligations challenging.
Exorbitant Medical Bills
Healthcare costs can be prohibitively high, and if you’re drowning in medical debt due to an illness or accident, Chapter 7 bankruptcy can discharge these debts, allowing you to focus on recovery without the constant financial stress.
Unable to Develop a Repayment Plan
When unable to develop a repayment plan for debts due to income level or the number of debts that are owed, Chapter 7 bankruptcy may be a practical option. Unlike Chapter 13, which involves the development of a repayment plan, Chapter 7 allows for the discharge of qualified debts.
Bankruptcy is a decision that should not be taken lightly, as there can be lasting implications for the future. If you believe bankruptcy may be the best way forward, it may be in your best interest to speak with a bankruptcy lawyer to understand the options available. While bankruptcy can have implications on a person’s credit, when drowning in debt, bankruptcy can act as a lifeline for the debtor, allowing the opportunity to rebuild and regain financial stability.