Bankruptcy no longer has the social stigma it once did. However, those who are considering bankruptcy may take comfort in knowing what has caused others to seek financial relief through this legal process. Although reasons for financial struggles vary from family to family, three of the most common causes of bankruptcy that are often cited by those petitioning for relief from the court include:
A recent publication in the Chicago Tribune notes that these three factors contribute to almost 90 percent of all bankruptcy petitions within the United States.
Is bankruptcy right for me? The decision to go into bankruptcy is not an easy one. Those who are struggling financially are wise to take three different questions into account when attempting to determine if bankruptcy is right for their family. First, how much of an income or savings is at your disposal? Second, how much do you owe? Third, how much do you own in assets (home, car, business interests)?
Gather this information together and seek legal counsel. An attorney experienced in bankruptcy matters will be able to answer your questions. Questions like what can you keep in bankruptcy and how will life look after the bankruptcy process is complete.
Bankruptcy is a legal process that can help those who are struggling financially find a fresh financial start. Those who have considered this process have likely stumbled on a number of legal terms, including “automatic stay.” This term refers to a court order that is granted after an applicant is approved for bankruptcy.
What happens when an automatic stay is issued? This court order requires creditors to stop contacting you. In addition to ceasing contact, these creditors cannot file a lawsuit in an attempt to gain payment or enter a lien against your property.
The automatic stay can also stop a landlord from evicting a tenant that is going through bankruptcy if the eviction is in connection to a demand for rental payment. The court order can also stop garnishment. Garnishment is a process that allows a creditor to remove money directly from your paycheck. When you get the paycheck from your employer, the creditor would already have taken a portion of payment from the check. When an automatic stay goes into effect, the garnishment should stop.
This order also extends to include utilities. A person that is going through bankruptcy is often protected from utility disconnection.
Does the applicant need to do anything to make the automatic stay go into effect? Essentially, no. The applicant just needs to put together a successful application for relief through bankruptcy. If granted, the automatic stay goes into effect automatically (hence the name).
This is just one of the many legal terms to understand before determining if bankruptcy is the right option for you. An experienced attorney can discuss this and other terms and help you decide the best way to get back on your feet.
Households around the country owe an average of $15,654 to credit card companies. Paying down this debt while saving for retirement can be a challenge for Mississippi individuals and families who are struggling to make ends meet, and borrowing from 401(k) retirement accounts to reduce revolving balances may seem like a good idea. Credit card interest rates are generally far higher than those imposed by retirement plans, but there are a number of important factors to consider before taking out a 401(k) loan.
Borrowing from money earmarked for retirement may not be a wise decision if it does not address the fundamental problem. When credit card balances are high due to excessive spending, paying the debt off with 401(k) funds will merely provide a temporary respite if spending habits do not change. However, this kind of borrowing may be prudent when revolving debt balances were caused by events, such as medical emergencies, that are unlikely to be repeated.
A 401(k) loan may not be a good idea for individuals who may change jobs in the near future. Employers usually expect workers who leave to repay these loans within 90 days, and failing to do this could lead to a tax bill and penalty fees. Those mulling this option should also consider the impact that borrowing from a 401(k) account will have on their retirement plans. This is especially important for individuals with 401(k) plans that do not allow new contributions to be made until outstanding loans are repaid in full.
Attorneys with debt relief experience may suggest filing for Chapter 13 bankruptcy to those with unmanageable financial situations who wish to safeguard their retirement savings. Funds in 401(k) plans have protection under bankruptcy law, and individuals who take this option may be able to enjoy the benefits of a fresh financial start without jeopardizing their future.
Bankruptcy is touted as a fresh financial start, but those who have done some research likely know it will have a negative impact on one’s credit score. Although this is true, there are many reasons bankruptcy may still be the best option. Three common examples to take into consideration before ruling out bankruptcy include:
Attempting to regain control of your finances is a frustrating process. A skilled lawyer with experience in alternatives to bankruptcy and the various forms of bankruptcy that are available can help guide you through this process and alleviate some of that frustration.
Toys “R” Us declared bankruptcy in September with a plan. The store was not going to give up. Instead, the story put together this plan to structure itself to reenter the marketplace successfully. Toys “R” Us is not giving up – it just went back to the drawing board to adjust its business model.
It may seem ironic that a business that thrives on keeping consumers in touch with their youth would provide valuable lessons in adulthood. Yet the store’s perseverance is applicable for anyone that is struggling financially. Lessons for those who are also struggling include:
Each form of bankruptcy has application requirements. In order to qualify, certain criteria must be met. An attorney experienced in these matters can review your situation and provide guidance on the best form of bankruptcy relief for you.