When you are facing difficulties paying off your debt, that debt can continue to accumulate. Filing bankruptcy may offer a solution. However, the filing process is complex. An experienced firm can assist in a variety of situations where bankruptcy may be the best answer.
1. You Are Being Sued by Creditors
When you continue to skip debt payments, the debt may get passed on to a collection agency. If you fail to pay the collector, they may eventually file a lawsuit. This can be a scary experience. If the debt collector wins the lawsuit, you may owe more than you originally owed, adding more debt to your total.
Filing a petition for bankruptcy provides protection in these situations. When you file, the court may issue an automatic stay. This prevents creditors from attempting to collect a debt while you resolve your bankruptcy proceedings.
The creditors can no longer call you or harass you at your place of employment. However, this is a temporary solution that requires you to settle your debts through the bankruptcy process.
2. You Are at Risk of Foreclosure on Your Home
One of the scariest aspects of owing significant debt is the risk of foreclosure. When you cannot make your house payments, your loan provider may begin the foreclosure process. Luckily, this process is lengthy and provides you the opportunity to file Chapter 13 bankruptcy.
With Chapter 13, you retain your assets, such as your house, and create a payment plan for paying down your debts. This can allow you to get caught up on your past payments and avoid losing your home.
3. You Can No Longer Afford to Pay Your Bills
When you lose your job or experience a reduction in income, you may struggle to pay your bills. This loss of income can cause your debt to continue to rise. Chapter 7 filings are intended for people that do not have enough income to handle the minimum payments on their debt and cover their basic living expenses.
4. Your Earnings Are Being Garnished
If you are sued by a debt collector and they win the lawsuit, you may still have trouble paying the debt that you are legally obligated to pay. In some cases, the court may agree to freeze your accounts or start garnishing your wages.
The automatic stay that is granted by the court also protects against further garnishment of your wages. However, you must still develop a plan to pay off your debts. Once your bankruptcy case is completed, if you fail to you make your payments, your wages may be garnished again.
If you find yourself in one of these situations, you should not delay contacting an experienced bankruptcy attorney or an organization that specializes in bankruptcy filings. Waiting to file may limit your options.
While bankruptcy does offer a solution for a variety of financial situations, it should be considered as a last resort. The proceedings will damage your credit score for seven to ten years, depending on the type of filing you choose. If possible, consider debt consolidation as a way out of your debt.