Many people attach value judgments to bankruptcy. Meanwhile, others understand that Chapter 7 and 13 bankruptcy protections are financial planning tools when things do not go as planned. Starting a small business is risky. Working as an employee at will is risky. Life is risky. Because there are no guarantees, our federal laws allow us to discharge debts we will never be able to pay. At some point, people who are under extreme financial pressure decide that enough is enough. When they start talking to others who have taken advantage of bankruptcy laws, they learn that the process is not as scary and dire as some would suggest.
When to take advantage of Chapter 7 and 13 is circumstantial. Here are a few things we hear from clients who tell us how and when they decided to move forward towards a fresh financial start.
1. I do not have enough savings to make it through a financial emergency. At some point people stopped saving while they increased spending and opening up new lines of credit. When the Joneses lost their million-dollar home in foreclosure after corporate downsizing, we all hit the brakes! Knowing the bottom can fall out and accepting reality means that more people are trying to put money away in savings. We all know that the stock market is not a sure bet, but for many people, the crash came without enough time to prepare. Once your burden is lessened you may be able to save again, knowing it is the better way to get ahead.
2. I am living on credit cards because the costs of daily life exceed monthly income. It is easy to run into unexpected car repairs and buy the plane tickets to Cousin Jill’s wedding in Florida in early March. The minimum payments tend to increase and most people keep up with the minimums. What happens is the fees and charges keep building and eventually the cards are maxed out and the minimums are still due. Have you done the math to figure out you will be long gone before you can ever pay off these credit cards? Many people who get a fresh start will also get new credit cards after a bankruptcy.
3. Bill collectors call me more frequently than do my friends and family. The creditors seem to know when you come home from work, when you sit down for dinner with the family, and when you have something good to say, only to be knocked down a peg by the late payment calls. Have you had the call from the nasally sounding collector, “Sir, can I ask you why the payment was late?” The harassment is more than most people can take with a grain of salt. Some of the creditors get nasty and threatening too. The automatic stay provision in bankruptcy makes them stop – as a matter of federal law.
4. My income is fixed or was recently terminated or reduced. Self-employed people can lose clients. Employed professionals can also find themselves out of a job or working less hours or with reduced pay. Are you going to turn down reduced pay/hours if job loss is the alternative? People with fixed incomes know quite well how to divide and pay bills. When that fixed income is reduced and the debts are still there a tough decision must be made. While some people are lucky enough to borrow from rich Aunt Edna, others have less choices. A fresh start in Chapter 7 or 13 can help cash-strapped families with temporary and longer term income issues.
5. A serious accident threatens my ability to keep up with the bills. What happens if the driver without insurance injures you in an accident and your own policy payouts are limited? Incidents of financial emergency are not always fault based. The mortgage and rent are still due, even when we cannot work on a temporary basis. If a lawsuit is involved there are pre-settlement funding companies who advance money on “sure bet” settlements but the interest rates are often sky high and not worth the initial price of admission.
If you want the collectors to stop calling and want to eliminate debts and fees you cannot afford to pay, and if you want to keep your house and car and some property, we can help you with the right Chapter 7 or 13 bankruptcy option.
To learn more or to move forward, contact an attorney at Joseph Wrobel, Ltd. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by dialing (312) 781-0996 to talk to an attorney.