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.
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.
If you are considering filing for personal bankruptcy you have likely looked into a Chapter 7 bankruptcy. A Chapter 7 petition for relief through bankruptcy takes many steps, including discharge.
What is discharge? Discharge is defined by the United States Courts as the process that “releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.”
Essentially, this means the debt is forgiven.
Can any type of debt get discharged? Note the above definition states “most debts.” There are certain types of debt that do not qualify for discharge through bankruptcy. It is important to carefully consider the role dischargeability will play in your bankruptcy petition before moving forward.
Examples of debt that generally do not qualify for relief include child support, alimony, tax debts and student loans. The failure to allow for discharge of student loan debt is a contentious issue. In some cases, an individual can overcome this general rule. Discharge of student loans may be available if the applicant can establish the loan results in an “undue hardship.”
In order to establish undue hardship, the applicant must meet a three part test. The test includes a review of the applicant’s income, duration of the repayment period and whether or not the individual has made a good-faith effort to repay the loans.
There are also some cases where a creditor may file a complaint objecting to the discharge. These cases are not often successful. Examples of success are present when the creditor can establish that the person seeking relief through bankruptcy has kept fraudulent records or committed perjury during the bankruptcy process.
