Should I File?

Should I Use a Debt Settlement Company or File Bankruptcy?
January 11, 2018

Nobody wants to have to file for bankruptcy protection, but sometimes unforeseen difficulties strike that leave few options.  Maybe you have emergency home repairs that you’ve put on credit and have fallen behind on payments.  Or perhaps a sudden illness or accident has left you with high medical bills.  Bankruptcy is a way to help you get out of a bad situation and get your life back on the right track for financial recovery and independence.

There are two types of bankruptcy that are typically filed for individuals.

 

Chapter 7:

Filing Chapter 7 Bankruptcy is a way to wipe the slate clean of debt.  Your credit card bills, medical bills, tax debt and other debts may be discharged through Chapter 7.  If you don’t have significant equity in a house or vehicle and you do have a lot of unsecured debt and little income to pay it off, this type of bankruptcy might be the right solution.  It is a liquidating bankruptcy which means that your assets may be sold to pay your creditors.  However, because under bankruptcy protection you are allowed certain exemptions toward property, you may be able to keep your home, car, Social Security benefits, and other personal property.

 

Chapter 13:

With Chapter 13 bankruptcy, your debt payments are restructured in a way that makes them more manageable and in many cases, reduced.  It gives you a strict plan in paying your debt and protection from legal action or harassing phone calls from creditors and collection agencies.  One of the major advantages of Chapter 13 bankruptcy is that you don’t have to liquidate your assets.  It’s for people who have the means to pay back creditors―it just gives them more time to do so.  Typically, you can have your debt paid off within 3-5 years.

Should you file?  Bankruptcy is not something that should be taken lightly.  It should be carefully considered because it will affect your credit.  For as long as it remains on your credit report (7 years for Chapter 13 and 10 years for Chapter 7), it may make it more difficult for you to obtain credit and when you do get credit, your rates may be higher.

Before considering filing for bankruptcy, you should request copies of your credit report from the 3 major credit reporting agencies (Transunion, Experian, Equifax) to understand the big picture and see a list all of your creditors and the amounts that you owe them.  Consider what changes you may be making in the near future.  Will you be moving to a new apartment?  Needing to buy a new car?  Applying for a new job?  Having a bankruptcy on your credit report may make these things more difficult, but so do the late payments, accounts in collection, and charge-offs that may appear if you don’t.

Filing for bankruptcy is a major decision and it’s not the right solution for everybody.  But under the right circumstances, it may be a lifesaver that gets you back on your feet and moving in the right direction.

The lawyers at Miller, Hollander & Jeda can help.  Their 35 years of bankruptcy experience will help you determine if bankruptcy protection is right for you and if so, which type of bankruptcy will work to your benefit.  They’ll help you through the entire process, expertly guiding you every step of the way.  Once your bankruptcy has been filed, you can expect to stop receiving those harassing phone calls from creditors.  Best of all, you’ll be on your way to becoming debt free.

Everyone deserves a second chance.  Call (239)775-2000 and let us help you get yours.

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