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Your first step in overcoming debt problems is recognizing you have a problem! If worries about your credit card bills or a pending foreclosure are keeping you awake at night, you probably already know you’re in over your head. Just cruising along, juggling credit cards, taking from one to pay the other is not a viable answer. So if this describes your situation, then take not, because just doing nothing makes the hole bigger and your position more desperate.

Here are 12 signs that indicate financial stress:

1. You routinely spend more than you earn.
2. You only make the minimum payment required on your credit cards.
3. Your credit limit is frequently maxed out on most of your cards.
4. You’re unsure about how much you owe or what may be on your credit report.
5. You skip payments on some bills in order to pay others, or use cash advances on one credit card to pay off another.
6. You find yourself arguing with your spouse over money.
7. You have recently been turned down for credit or a loan.
8. You panic when faced with an unexpected expense, such as a car repair.
9. You owe more on your car than it’s worth.
10. There’s no more equity in your house.
11. Creditors are calling you about overdue bills.
12. You are either thinking about bankruptcy or a divorce.

 

We have all heard about bankruptcy, but what does it mean? What are the implications?  As is to be expected, filing for bankruptcy can be complicated, unless you have professional help to walk you through the process.

Simply put, bankruptcy can be defined as the legal process thorough which individuals or businesses in financial trouble are able to work out their debts and pay them out under the protection of the bankruptcy court.  Often “liquidations” or “reorganizations” are the words that are used to sum up the process that unfolds when you file for bankruptcy.

The two kinds of bankruptcy that you can file for are Chapter 7 and Chapter 13.  There are various factors that would determine whether you should opt for the one or the other. Through Chapter 7 Bankruptcy, you liquidate all unsecured debt, and hopefully protect any assets you have within the bankruptcy exemption rules. Most people are protected, because they don’t have any non-exempt assets.  In the event debtor is making too much money, they choose Chapter 13 Bankruptcy, which is the reorganization type of bankruptcy. The debtor is allowed three to five years over which to pay back a portion of the debts, based in part on the value of non-exempt assets, and their disposable income, left over from normal living expenses. Say that you have $100.00 in disposable income. You would have to pay that into a plan for 60 months. After 60 months, the balance of your debts would be discharged in full, even if they are far from being paid off.

One should keep in mind that there are intricate details to the legal process that need to be taken into consideration before decisions are made to file for bankruptcy.  Who qualifies? Which kind would apply to you? Will you be able to keep all of your property?  There are many such questions that arise in such a situation.  In this situation, you need to consult with an experienced bankruptcy law firm that can guide you through these complicated decisions and procedures.

Filing for bankruptcy may not be the solution to all your financial problems though.  In fact, bankruptcy does not cover all debts.  For example, debts related to child and spouse support, or taxes are not covered in bankruptcy.

Do you have a Co-signer?

Before filing for bankruptcy it is important to know that your co-signer might be held liable for the co-signed debt. A Chapter 13 bankruptcy will protect your co-signer though, since it offers a partial repayment plan. With a Chapter 7 bankruptcy, only the debtor is protected and the co-signer will still be liable for the debt.  With Chapter 7 bankruptcy, the creditors will still have the right to demand that your co-signer pay off the outstanding payments.

Under chapter 13 bankruptcy, as long as the bankruptcy plan is active the co-signers will receive a stay.  All the same, when the plan closes, the co-signer is once again liable to pay any outstanding payments, even though the debt is discharged in favor of the bankruptcy debtor.

Don’t lose another sleepless night! For solutions to all of your financial problems, and rebuilding your credit, contact the law offices of Paul M. Allen. I promise that help is just a phone call away. Consultations are free, but by appointment only. Call today. Glendale 818-334-5445, 818-552-4500 or Cerritos 562-356-9931, or 562-865-4480.

(This article is for information purposes only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.)