When to File Bankruptcy

Considering Declaring Bankruptcy?

Are you one of the countless Americans living under the cloud of an overwhelming burden of debt? If you are finding that it is difficult – or impossible – to afford your loan payments and cannot see any way that you will ever get out of debt, you may be considering declaring bankruptcy as a solution for your situation. After all, bankruptcy is the most powerful and sweeping approach to wiping out most or even all of a person’s debt, and when used effectively, it can give the person a fresh start in life.

When Should I consider Filing bankruptcy?

Filing for bankruptcy is a major life event that will impact your financial future for many years to come, so it is important to know when bankruptcy is your best choice.

The first sign that you are in trouble financially usually comes with an event or change in your life that reduces your income or increases your expenses, making it difficult to afford your monthly bills.  Once you have determined that your current situation does not allow you to make your payments, and you are in jeopardy of becoming late on your bills, you need to assess your budget and see if there is room to cut costs.  Adjusting your life style and spending habits may create enough room in your budget to continue to pay your bills until you can find a way to increase your income or cut more of your expenses.  If there is simply no room to trim your budget or you have made those financial adjustments and you still cannot make your payments, then you may be forced to fall behind on your payments.

Once you stop making payments you can expect to begin receiving letters and phone calls from your creditors harassing you for money.  In addition to the harassing calls and letters, your creditors may threaten you with repossession of your assets, wage garnishment, or a lawsuit to collect from you.  If your mortgage is one of the bills that you cannot pay then you may receive a notice of default and foreclosure on your home.

If you are dealing with any of these issues and your financial situation is not going to improve soon, then it may be time to seek the counsel of a Jacksonville bankruptcy attorney to discuss filing bankruptcy.

When is Filing for Bankruptcy a Good Option?

Anyone that has more monthly expenses than they have monthly income and cannot afford to pay their bills can be a candidate to file bankruptcy.  You do not have to be poor in order file for bankruptcy, however income does determine your eligibility for which chapter of bankruptcy you can file.  The means test is available to help you determine whether your income qualifies you for a chapter 7 or a chapter 13 bankruptcy, but in general if your income is lower than the median income for the state of Florida, you qualify for a chapter 7, but if it is higher than you may qualify for a chapter 13 bankruptcy.

Chapter 7 bankruptcy will liquidate your assets, so for people that do not have many assets but have a lot of debt, filing bankruptcy can be a good option.  If you are in debt but would like to keep your home, car, or other assets then a chapter 13 will allow you to do that.  However, a chapter 13 bankruptcy will require you to make monthly payments as part of the repayment plan for 3 or 5 years and can occupy all of your disposable income.

Filing for bankruptcy is also an option to avoid the foreclosure process once your lender has decided to move forward with it.  Instead of a loan modification or a short sale, bankruptcy will stop the foreclosure process and allow you to eliminate your debts.

Bankruptcy has a large impact on your credit score and can make getting a loan, credit card, or even a job difficult for years following  filing bankruptcy.  Because of the implications that come with filing for bankruptcy it is important to meet with a Jacksonville bankruptcy attorney to discuss your options and decide whether it is your best choice.  The Law Offices of Justin McMurray always offers a free bankruptcy consultation so call to schedule a consultation today!

Bankruptcy Is Not Right for Everyone

It is important, however, to fully weigh all of your options before moving forward with a petition to declare bankruptcy. The damage to your credit can be significant, and you will lose your credit cards, to name only two of the consequences. There may be a more suitable and less drastic approach to handling your problems with debt. For example, a Jacksonville bankruptcy attorney from our firm may be able to negotiate a debt settlement plan that would allow you to pay off your debts for a greatly reduced rate, or you might be able to stop a wage garnishment by requesting a head of household exemption.

Foreclosure Defense Strategies

If you are threatened with foreclosure of your home, the best solution for you might be to hire a lawyer to represent you in negotiations with the bank for a loan modification, which would reduce your mortgage payment by slashing the interest rate, lowering the loan balance, or extending the repayment period. In the event that you would rather sell the house, we can help you pursue a deed in lieu or a short sale, both of which are common foreclosure defense strategies. It might even be possible to prevent the foreclosure by taking the case to court in order to prove that you have been the victim of predatory lending or that the foreclosure is unjustified.

Speak with a Jacksonville Bankruptcy Attorney Now

Contact The Law Offices of Justin McMurray, P.A. now for a free consultation so that we can review all the options that may be available to you and help you take the first steps in your case. If you do decide to file bankruptcy, it is nearly always in your best interest to get started as early as possible so that you will be protected from any further creditor action such as repossession, wage garnishment, or foreclosure by an automatic stay. Fill out our free case evaluation form now!