Bankruptcy: How to Get a Fresh Financial Start
There are some very good reasons for a person to file for Bankruptcy once they are in financial trouble. Troublesome debt like Credit Cards and Medical Bills can be discharged. In addition, you have the option to rehabilitate other debts like ones that are secured by an asset such as a car or a home. These debts are called secured debts and are secured by a physical asset. So, when an individual falls behind on their car loan or their mortgage, they can save the asset paying the arrears owed and stopping the creditor from repossession of the asset.
Generally, debts are eliminated or discharged and disposed of in other ways within a bankruptcy proceeding. By filing for Bankruptcy the choice of how to deal with debt is taken away from the creditor and is given to the debtor. The beauty of the Bankruptcy system is that it gives the debtor this freedom of choice. Under the Bankruptcy system, it is the Debtor who dictates to the creditor how their debts will be dealt with.
Far too often, debtors feel powerless as to how and what to do to resolve their debts because of the aggressive actions of creditors. Once a Bankruptcy proceeding is completed, the debtor truly gets that Fresh Start that the Bankruptcy System is famous for. Creditors are stopped dead in their tracks from their harassing and aggressive actions that can make a debtor feel overwhelmed. Sleepless nights become a thing of the past as the debtor takes control of their debt and decides how to resolve it. The added bonus is that the debtor is freed from the stress of dealing with heavy debts with their exorbitant interest rates and minimum monthly payments that seem to last forever.
What does a “Fresh Start” actually mean and how the Bankruptcy System provides it for you.
The Bankruptcy System is part of the Federal Courts. The whole purpose of the Bankruptcy System is to help debtors who are overwhelmed with unbearable financial debt. Most or all of a debtor’s debt will be discharged and or dealt with in some alternative manner within the Bankruptcy System. This gives the debtor a sense of relief from an unmanageable situation.
For most debtors, losing their home or car is something that can be quite devastating. Being harassed by creditors with their aggressive tactics can become unbearable. Constantly seeing the extremely high interest rate charges grow and compound on their debts can give the debtor a sense of being completely overwhelmed. Most debtors simply begin to feel that the debt will never end and keep growing and growing.
Filing for Bankruptcy can relieve the debtor of the stress dealing with an overwhelming situation. Once a debtor avails
themself of the protections of the Bankruptcy System, the protections kick in and stop creditors from any more of their aggressive actions.
Interest charges actually stop and are frozen on the debtor’s accounts. This can save the debtor thousands of dollars. The creditors are restricted from any and all negative actions against the debtor. The debtor can then get all or most of their debts discharged and or dealt with in a manner most beneficial to the debtor.
Arrears or missed payments on the debtor’s home or car are typically handled within the bankruptcy system. These debts are called secured because the original debt is secured by the actual home or car that the debt is entered into for.
Payment plans within Bankruptcy can be used to let the debtor catch up on back home or car payments, which can be used to protect the debtor’s home or car from repossession.
Actions against the debtor for back rent can be avoided utilizing the protections of the Bankruptcy system. Wage garnishments and utility company shut offs can be avoided and stopped. A debtor’s driver’s license can be reinstated and of course the debtor is on put on track for eventual credit restoration in the future.
How to determine if Bankruptcy is Right for you?
Initially, the question of whether or not you should file for Bankruptcy is something a person should do only after consultation with an experienced Bankruptcy Attorney. Indeed, the average individual does not know for sure which debts that they have, can or will be eligible for Bankruptcy resolution. Because of this, the average person might be in a situation where the amount of relief does not justify going thru a bankruptcy.
There are certain categories of debt that simply are not eligible to be discharged in Bankruptcy. Other categories can be, however, there are difficult obstacles to overcome in order to allow them to qualify for discharge in Bankruptcy.
Generally, court ordered debts such as Alimony, Support and or Government Fines and Penalties are not eligible for a discharge in Bankruptcy. Other debts are eligible for a discharge in Bankruptcy only if certain requirements are met. Examples of this are Student loans, which require a showing of Hardship and certain Taxes, which are only eligible for discharge under restricted conditions. Simply, these requirements or conditions can be very difficult to achieve, making the particular type of debt rarely discharged in a Bankruptcy.
Another threshold issue is whether or not the debtor can retain certain property. Much of this question is resolved in the actual Bankruptcy Petition itself. Think of a Petition as the actual application for a Bankruptcy. In completing the Petition, the debtor has to satisfy the various rules found in the Bankruptcy System.
Only after a consultation with an experienced Bankruptcy Attorney can a debtor know which assets can be protected in a Bankruptcy. Generally, there are exemptions to protect property. However, these exemption protections get applied only under certain situations. Depending on which Chapter the Debtor files, there are resulting rules that come into play. For most personal Bankruptcy situations, generally, Chapter 7 asset retention is dependant on utilizing exemptions. In a Chapter 13, the assets are not in danger and the debtor is concerned with the amount of disposable income they have. This disposable income determination lets the debtor know how much, if anything the debtor has to pay back to their creditors.
After Bankruptcy Law changed, the debtor is subject to a preliminary test called the Means Test. This test shows the debtor which Chapter of the Bankruptcy System the debtor will be able to file. The Means Test is concerned with the income of the debtor. Basically, if the debtor has more income than the median person in his/her state, they must file a Chapter 13. Chapter 13 is the Chapter where the debtor is required to pay back their creditors using the disposable income they have. In a Chapter 7, the debtor gets a discharge of all eligible debts. Thus, as is obvious, a Chapter 7 is of course more desirable.
These issues and others are in play when deciding if Bankruptcy is the correct path for the debtor. Only after a consultation with an experienced Bankruptcy Attorney can the debtor really know if Bankruptcy is the right choice for them.
At the Law Office of Mark N. Glyptis, the staff has the experience and know how to guide the debtor to a successful resolution of their financial difficulties. The Main Goal at the Law Office of Mark N. Glyptis is to help the debtor achieve that Fresh Start that the Bankruptcy System is famous for. After an initial consultation, the debtor will know if Bankruptcy is right for them. Sometimes Bankruptcy is not the right move for the debtor and if so, we guide the debtor to a resolution of their debts using other methods. Our goal is to correct the debtor’s financial difficulties in record time so the debtor can get on with a stress free life. Call today for a free consultation.