Anyone who is filing for bankruptcy will likely have many questions related to the benefits and drawbacks of bankruptcy if it is the right decision for filing for bankruptcy. Many personal-level bankruptcies are triggered by events outside of one person’s control, especially in the case of medical issues and macroeconomic issues. Bankruptcy should be looked at as a serious but powerful tool for an individual person with no other options to take control of their finances.
If you are facing problems in managing your debts and finances, contact the Ward K Johnson Law Firm today. You can schedule with us to discuss the details of your situation and to learn more about your options for resolving your financial problems and debts.
How Common Is Bankruptcy
Over the past decade, bankruptcy has become a common process in America. Bankruptcy filings reached an all-time high since 2005, with more than 2 million filings. Or, in other words, one in every 55 households in America started filing bankruptcy that year.
The most common reason for bankruptcies was related to medical conditions (such as serious injury or illness, medical expenses which are not covered by insurance companies, and an individual doesn’t have time to work due to medical conditions). Other common reasons for bankruptcy, include job loss and reduced income, credit card debt, and marital problems.
Will an Individual will Lose Everything If they File Bankruptcy?
People fear that bankruptcy means giving up everything they have, such as their bank accounts, houses, and their vehicle. But in reality, most of the debtors get to keep any or all of the possessions they have. If you file bankruptcy under Chapter 13, you will be allowed to keep all your assets, but the value of the asset will be the key factor in your repayment plan.
Which Is Better File for Bankruptcy or Just Not Pay?
Bankruptcy is one of the most serious financial decisions a person can make in his life. But, depending on the circumstances of your problem, bankruptcy could be the best option you can choose. Even though bankruptcy might impose a serious hit on your credit in a short term, most people’s credit scores soon begin to improve.
One of the best benefits of bankruptcy is, reducing the stress caused by crushing debts and unpaid bills, and allowing you to move ahead in your life.
If you are considering filing for bankruptcy, you should first consult with an attorney to determine if any other options might be better suited for the situation. There are a number of options are available for people who are having trouble managing their debts, including debt and credit counseling.
When You Should or Should Not filing for Bankruptcy
As a golden rule, you may wish to file for bankruptcy if the total consumer debts (credit card debts, payday loans, unpaid medical bills, cash advances, etc.) exceeds 50 percent of the annual income, then you are not left with any other option rather than follow to pay off those debts within the next five years of time.
Considering non-bankruptcy options
A debt management plan can help you develop a plan to pay your debts by using your current financial means. You might also be eligible for debt consolidation, in which all of your credit accounts are paid off so that your balances are consolidated into one amount that you make regular payments on. You may end up paying lower interest, meaning you have to spend less money to pay back your debts.