Making the choice to file for bankruptcy can be challenging. Almost everyone who is faced with this choice oscillates between “Fight” and “Flee”: fight to pay off the debts vs escape the ongoing strain and start afresh. Our judgement.
Various bankruptcy options
To make a choice, you must be aware of your options.
On your own, are you able to prevent bankruptcy: Make a budget for your actual, monthly living expenses before exploring non-bankruptcy options. Include mortgage and auto payments, but disregard any other outstanding debt.
Can you pay off your obligations other than your mortgage and automobile in three years with the money you have left over after covering your current living expenses? Can you make it happen by lowering costs, raising revenue, negotiating prices, or selling assets?
No retirement savings allowed
Before using IRA or 401K plan liquidation to pay creditors, think very carefully. The law normally protects these assets from creditors’ collection efforts. Retirement funds are difficult to replace once used, and more crucially, using them to pay off debts might result in further debt in the form of income taxes and early withdrawal penalties.
Despite your best efforts to pay off your debts, one may wind up replacing your other creditors as a tax creditor. Can outside assistance help you avoid bankruptcy:
Contact Consumer Credit Counsellors or a comparable, reputable non-profit organisation if you are unable to pay off your debt within three years under the current conditions.
They may assist you in developing a spending plan and negotiating a repayment schedule that might include a lowered or even zero interest rate on your existing debt. In general, creditors stop trying to recover money from those who take part in CCC schemes.
When credit card debt makes up the majority of the debt, these approaches often work well. The customer is left paying unsecured, dischargeable credit card debt while non-dischargeable taxes or past-due support obligations go unfulfilled when CCC counsellors omit non-dischargeable tax debt from the repayment plan.
That strategy rarely provides the debtor with the necessary relief. Plans for debt settlement seldom succeed. The media is flooded with advertisements for debt settlement plans that promise to strike a deal with your creditors in exchange for a regular payment. The only issue is that it rarely functions. The debt settlement professionals have already received their compensation before you realise this, so they are no longer invested.
Even though you may have spent a lot of money on the simple issues, your problem nonetheless remains. If none of these repayment options are practical, think about filing for bankruptcy. You cannot determine if filing for bankruptcy is the best course of action using a magic formula. A knowledgeable bankruptcy attorney is a fantastic option.
The likelihood that bankruptcy will improve your financial status increases with age, the number of dependents you have, the amount of debt you owe, the size of your cash reserves or retirement savings, and the amount of your debt that is not dischargeable.
You may contact the famous Recovery Law Group if you’re seeking for legal representation and advice for filing for bankruptcy. Visit https://www.recoverylawgroup.com/bankruptcy/ to schedule an appointment.