The beginning of every year can come with mixed emotions: relief that the old year has passed, excitement for what the new year has in store, and every other feeling in between. However, for some people, the new year is not something to look forward to. It is just another, day, week, month of hounding creditors. If this is starting to sound familiar, do yourself a favor, and consider starting over this year.
If paying off your debts doesn’t seem like an option for you, there are other ways of getting relief from the creditors that haunt your mailbox and missed calls. What I am specifically referring to is bankruptcy. While you may see that as a taboo word, please know that filing bankruptcy is not the end of the world and can help you achieve the fresh start for which you have been looking.
What is Bankruptcy?
Bankruptcy is a federal process that provides a fresh financial start to people and companies with excessive debt by reducing or eliminating the debt. Some debts (e.g. child support) cannot be eliminated, and other debts (e.g. student loans, tax debts) are eliminated only under certain circumstances.
How to know if Bankruptcy is right for you
The decision for file bankruptcy is not an easy one. There are many factors that go into deciding if it is right for you. However, if you have made it this far, you may already be under some financial duress. Here is a list of common patterns seen by bankruptcy attorneys. If one or more of these apply to you, bankruptcy may be able to help improve your situation.
- Your wages are garnished or your bank account is attached
- You are unable to make even minimum payments to your creditors, or you struggle to make minimum payments each month
- Collectors harass you at home and at work
- You pick and choose what creditors to pay on-time
- You are caught up in a cycle of payday loans
- You are paying off large unsecured debts (e.g credit cards, medical bills, etc.)
- You are at risk for repossession or foreclosure
- You are being sued for a debt
- The IRS is threatening collection action
If you are experiencing any of these or other financial struggles, it may be time to set up a consultation with a bankruptcy attorney.
Other FAQs
Even before making your final decision, the process can come with a lot of questions. Questions like, is a Chapter 7 or Chapter 13 bankruptcy best for me? Can I still keep my house/car/etc.? How much will this cost me? How long does this process last? How will a bankruptcy affect my credit score? The list goes on and on.
The short answer for all of these is it depends. Every aspect of a bankruptcy is dependent on your particular situation. The best thing to do is to determine your income, expenses, assets, and all your debts and sit down with an attorney to see what route is best for you.
The most important thing to remember is that bankruptcy can help you get relief from the financial stresses that burden your everyday life. And don’t forget that bankruptcy is an honorable option, used to give worthy people a fresh start after falling in hard times. As tax season approaches, don’t be afraid to put your refund toward a fresh start.
