Top 3 Signs You Need to Consider Filing for Bankruptcy
Filing for bankruptcy is a big decision and one that most people try to avoid at all cost. While we understand the hesitation to take this legal step, we all too often see the downside of folks waiting too long to resolve their debts. How do you know if your circumstances and debt are significant enough to warrant a bankruptcy filing?
Here are some tell-tale signs that you should contact a bankruptcy attorney to discuss a possible filing:
#1 Your debts expenditures exceeds your monthly income. You may be able to resolve this if it is a result of a short term reduction in work hours or a one-time expense that came up unexpectedly. You may be able to offset this temporary problem by increasing your income by getting a second job to work on paying down your debt. But if this scenario is not practical or available to you, don’t drown in debt before taking corrective action to resolve your situation. Through our services, you have options to eliminate debt, consolidate the debt or reduce the debt through a negotiated settlement without filing for bankruptcy.
#2 In spite of making all of your monthly payments your credit score continues to go down. If you credit score is in a downward spiral then it is time to make a course correction. Having poor credit can cause you to pay more for things through higher interest rates or prevent you from making a necessary purchase because you don’t qualify for the financing
It is counter-intuitive, but filing for bankruptcy increases your credit score for the majority of people. Why? Because bankruptcy debt resolution has a positive influence on the main culprits of a poor credit score, namely a poor payment history or a high debt to income ratio. Once a Bankruptcy is filed there are no more missed payments, and your debt to income ratio is resolved because of the elimination of the debt.
#3 You are facing legal action by a creditor such as foreclosure, vehicle repossession or garnishment. When creditors get to the point of taking legal action, they most likely are unwilling to work out voluntary repayment options with you. We see far to may people walk through our doors that have already lost their home to foreclosure or had their bank account wiped out through a garnishment when these creditor actions could have been easily stopped. In the situation of a home foreclosure, if the creditor has followed through with their promise to foreclose, it cannot be reversed. Prevent losing your assets, consult with a licensed and qualified bankruptcy attorney to get free advice before it is too late.
We are here to help! We offer free consultations to help our community understand the best course of action for their unique circumstances. Sometimes filing for bankruptcy is the best option and sometimes not. We will provide a comprehensive and confidential consultation to review your current debt situation, long term financial goals and current terms for your debt (interest rates, etc.) and advise you on all possible options to reach your goals and find long term financial stability.
What is the difference between Chapter 7 and Chapter 13?
Chapter 7 bankruptcy is a debt elimination program designed to completely wipe out and eliminate unsecured debts, such as credit cards and medical bills. We call it the “fresh start’ program. Chapter 13 bankruptcy is a debt consolidation program and is designed to set up repayment terms with your creditors. The Chapter 13 is a 36 -60 month repayment plan and provides broader protections and tools than the Chapter 7 bankruptcy does not, including modifying vehicle contracts and curing mortgage arrears over the length of the Chapter 13 Plan.
Filing for either type of bankruptcy provides some commons benefits including:
- Legal protection from your creditors and court protection from creditor calls and harassment;
- Opportunity to improve your credit score;
- Ability to surrender property you can no longer afford without financial consequence.
Call us today at 866-261-8282 for a free consultation with a licensed Michigan bankruptcy attorney. We have six convenient office locations in the following counties: Washtenaw, Wayne, Macomb, Oakland and Genesee. For your convenience, you can also schedule a time online.