The pandemic is putting stress on many hard-working families. Under normal circumstances, paying bills and enjoying life is not challenging. They earn the money to afford a comfortable life. However, this year is anything but normal. With a substantial amount of income lost by just one member of the household losing their job, you may consider filing bankruptcy. It’s important to weigh the pros and cons of this prior to making a final decision.
Do You Need an Attorney?
Filing for bankruptcy can involve dissolving some of your assets. This means you can potentially lose your home, your car, and anything else of value. Creditors are not quick to release you from monetary obligations. Going it alone can put you at risk for having to repay all the debt you owe in one form or another. With legal representation on your side, you can rest assured that they will do everything within their power to achieve positive results. Experts at Rockwell Legal Group recommend hiring bankruptcy lawyers to deal directly with creditors and court requirements for filing and with your documentation presentation.
Large amounts of debt coming at you from multiple sources can make your head spin. With each day that passes, you get further behind. This is a scenario that many families face. At this time, you have two options. You can repay the debt or you can file for bankruptcy. The latter may sound easier, and become your choice. However, there are other ways to repay debt. If you own a home and have equity, you can refinance the existing loan or you can apply for a home equity loan. At closing, you can use the money to pay off outstanding debt. Unfortunately, if you are behind on your mortgage, the bank will, in most cases, deny the loan request.
Contact the Creditors
If you want to avoid filing for bankruptcy you can try to make arrangements with your creditors. It’s a long and stressful process. However, some may be willing to work with you to avoid litigation. Contact each one and advise them of your current situation and ask if there’s any way to start fresh at “current” status. Some loans and credit card companies have hardship clauses where if you lose your job they can temporarily reduce your payments or put them on the back end of the loan.
Types of Bankruptcy
You’re tired of receiving past due and collection notices and endless phone calls at all hours. You are falling further behind and have no way to repay the debt. This stressful way of living can cause you to make a hasty decision. However, it’s important to know what filing for bankruptcy means. The most common filing is Chapter 7 as it releases you from most of your debt, wiping the slate clean. In addition, in many cases, you keep everything. Chapter 13 is another form of bankruptcy. It’s something a judge can decide if he or she feels that you have the income to support making payments over time. Knowing the requirements is where having a bankruptcy attorney ahead of the filing can make the process virtually painless.
Long-Lasting Effects of Filing Bankruptcy
Working with creditors and consolidating debt are two options you should try ahead of declaring bankruptcy. Bankruptcy will remain on your credit report for 7 or more years. This means that if you plan on buying a home or a vehicle, you may have a much harder time doing so. Depending on your starting credit score, it could take an initial hit. However, some filing for bankruptcy can open the door to a fresh start. Within a couple of years, you can raise your credit score by applying for a secured card and making payments on time.
Filing for bankruptcy should be something you decide on weighing the pros and cons. Understanding the types of bankruptcy and other options will allow you to make a wise decision.