Is it Time to Consider Bankruptcy? 6 Questions to Ask Yourself½
How do you know if bankruptcy might be your best option for debt resolution?
Below are some typical questions we discuss with our clients at the initial free consultation to determine if they need our assistance with bankruptcy or a debt settlement solution. If you feel you may need to speak with a professional, we are a helping hand. We offer free in-office or phone consultations and can usually accommodate a same-day request. We are a Michigan based debt resolution law firm with offices in: Detroit, Ann Arbor, Dearborn, Southfield, Flint and Warren.
If you are struggling with debt, here are some good questions to consider and honestly evaluate:
1. Are you paying just the bare minimums on your debt and feel like you are treading water each month? If you don't have the available income and/or have too much debt to create a repayment plan to be out of debt within a 2 -3 years, then consider other options. Paying only the bare minimums on your debt creates an endless payment stream with no hope of saving for the future. There is no need to endlessly struggle with debt obligations.
2. Are you chronically behind on paying your monthly bills? Paying past due bills typically means additional interest charges and late penalties. The cycle can quickly become vicious and create runaway debt and harassing collections.
3. Are you using credit cards or loans (payday loans) just to meet your living expenses, therefore accumulating more debt each month? If you rely on new credit sources or credit cards to pay your base monthly obligations, then you definitely need to consider some form of debt resolution. Accumulating more debt each month is not a sustainable budget plan for your finances.
4. Are you behind on mortgage payments or car loans? Getting behind on secured debt obligations can create unwanted consequences such as home foreclosure or car repossession. Late fees and interest charge can also mount to make maintaining the property unaffordable.
5. Are you paying high interest rates (over 9 - 10%) on credit cards, collections or your car loan? Having a low credit score can usually result in having to pay higher interest rates. Unfortunately, the additional cost associated with higher rates can make it more difficult, if not impossible, to manage a balanced budget - let alone working on paying down debt. When you are struggling to manage your budget, you may miss payments or pay bills late, hurting your credit score and causing you to pay higher interest rates (the negative cycle of low credit scores and high interest rates continues). Consider eliminating unsecured debt, such as credit cards and medical bills, or consolidating at 0% interest.
6. Are you facing harassing collections, judgments or a garnishment?Collections can affect your stress level and quality of life. Judgments and garnishments can extend the life of the debt almost indefinitely and drain your bank account or pay-check and derail your finances. Take control of your finances by exploring your options for debt resolution. At our firm we help clients find lasting financial security through:
- Filing Chapter 13 Bankruptcy for Debt Consolidation. This program allows you to:
- Consolidate your debt into affordable monthly payments;
- Prioritize your debt to ensure that your car and/or mortgage get paid before other bills;
- Pay unsecured debts such as credit cards or medical bills at 0% interest;
- Reduce your car loan interest rate if it is too high;
- Stop creditor actions such as foreclosure, repossession, judgment, garnishments, etc.
- Pay only what you can reasonably afford to pay towards unsecured debt, the balance is legally eliminated with the court discharge at the completion of your case;
- Improve your credit score through debt reduction and timely payments to your creditors.
- Chapter 7 Bankruptcy for Debt Elimination. This option provides complete debt relief from all general unsecured debts, such as:
- Credit cards;
- Medical bills;
- Old utility bills;
- Personal loans;
- Repossession or loan deficiency debt;
- Older income tax debts.
- Non-bankruptcy debt settlement. If bankruptcy is not the right option for you, we can explore settling the debt directly with your creditors. Usual benefits include:
- Reduce total amount you pay to satisfy the debt;
- Legal release from further obligation on the debt;
- Improved credit score;
- Resolves debts that may impede your ability gain new credit in the future;
- Avoids formal creditor actions to collect.
As you can see, there are benefits and considerations for each these options. Allow us to help you better understand if you qualify and which option is best for you. Call us at 866-261-8282 or schedule an appointment time online.