If you cannot pay your debt, there are other ways to repay those debts without filing for bankruptcy.
Let’s look into some ways you can go rather than file for bankruptcy.
If everything you own now or will receive in the near future is covered by exemptions, then your creditor can take nothing from you. In legal terms, you are judgement proof.
Usually, the elderly are judgement proof as social security is protected from all creditors and personal property generally has little value and is exempted from claims of creditors.
Two questions arise —
- Is the present financial state expected to continue into an unforeseeable future?
- Can you live with the harassment of creditors trying to get something from you?
If the answer is yes, then you can get by without filing for bankruptcy.
What do you own?
If you have a substantial net worth even after the exemptions, then your problem might not be insolvency, it might be liquidity because bankruptcy exposes all that value to payment by your creditor. Bankruptcy law specifies that all your creditors get paid in full amount if the debtor has money except the exempted property, before the debtor gets anything.
It may be possible for the debtor to settle outside bankruptcy court with your creditors, but watch out for the tax consequences of debt forgiveness. If you or a surrogate can negotiate deals and if cancellation of debt income issues don’t impact you, then bankruptcy isn’t necessary for you.
Debt dies of old age.
Most debts, except federal student loans, have an expiration date. The statute of limitations makes the debt unenforceable in the courts.
If your debt is very old or there has been no activity, then the creditors might not be able to sue you to collect.
When lifestyle changes are possible,
The smaller your debt, the younger you are, and the larger your income, the more likely it is that you can repay your debt without involving the courts.
You can only file a chapter 7 bankruptcy every 8 years. The interval between discharges has been increased by the bankruptcy “reform” act of 2005.
You don’t want to use this card on circumstances you can resolve on your own. You may need bankruptcy relief in the future. Let’s hope not, but it is possible.
Reputable credit counselling agencies can assist you in determining whether you can resolve your debt on your own or if you need the assistance of a bankruptcy court.
If you want good legal counsel and if you live near Los Angeles or Dallas, TX, reach out to the Recovery Law Group on 888-297-6203 or log on to https://recoverylawgroup.com/bankruptcy/.
No one wants to file.
If you fall into one of these categories, then it is better to stay out of bankruptcy courts.
But consider this: if you are here, reading this, it is far more likely that you would benefit more if you filed for bankruptcy and are reluctant for all the wrong reasons.