Common Questions and Answers about Bankruptcy
Exploring Legal Options for Debt Relief and Financial Help in Texas
Our society tends to stigmatize financial problems, but most people experience trouble with money at one time or another in their lives. The U.S. Bankruptcy code provides protection for people who have found themselves in an unmanageable situation due to consumer debt. Debt and problems with money are hardly ever talked about, and as a result, most people have some misunderstanding about how bankruptcy works. Most of the time when people talk to a bankruptcy lawyer and understand how the law will protect them, they only wish that they had done so sooner.
How Does Bankruptcy Help Someone Who is Struggling Financially?
Bankruptcy helps different people in different ways depending on your situation, but here are a few common financial issues and how bankruptcy can help with them:
- People who are overwhelmed by credit card debt or struggling to make their minimum payments:
If you qualify for Chapter 7, bankruptcy can completely eliminate your debt. If you file for Chapter 13, bankruptcy will consolidate all of your debt and reduce or even eliminate interest and penalties.
- People who are being constantly bothered by collection agencies and aggressive calls:
Whether you file for Chapter 7 or Chapter 13 bankruptcy, the “Automatic Stay” goes into place. The automatic stay prohibits any and all collection activity. That means bankruptcy can:
- Stop Foreclosure of a Home
- Stop Repossession of a Car or any other Asset
- Stop Wage Garnishments if money is being taken from your paycheck
- Stop Collection Lawsuits
- Stop Creditor Calls and Harassment
Bankruptcy will not make all of your financial problems disappear, but it can give you some time to work through them, get your feet on firm financial ground and get a fresh start.
Can Bankruptcy Stop a Foreclosure? Can It Help If I’m Behind on House payments?
The automatic stay will stop any collection efforts, including a foreclosure or scheduled sheriff sale. Bankruptcy will also give you some time to work with your lender to catch up on past payments or make an agreement on how you will do so. It will NOT eliminate outstanding mortgage payments, and it will not directly affect the amount you pay on your mortgage. So if you simply cannot afford the mortgage on your home, bankruptcy will not fix that. However, it can free up more of your monthly income to put toward your mortgage after eliminating, reducing or re-organizing other debts.
How is Bankruptcy Different From Credit Counseling or Credit Card Consolidation?
The first thing to understand about offers that you may have heard on the radio or even received in the mail is that credit card counseling and consolidation companies are not bound to any type of ethics. A quick search online will show you endless reviews from people who felt duped, mislead and taken advantage of after working with a credit counseling company. When you work with a bankruptcy attorney, you will get exactly what you are promised and exactly what you pay for. Attorneys are bound to extremely strict ethical codes where credit card counseling companies can more or less do what they please and hide things like variable rates or additional fees in the fine print.
More importantly, if you qualify for Chapter 7 Bankruptcy, working with an attorney through the bankruptcy process can actually ELIMINATE your debts. For people who qualify financially (meaning they do not make too high of an income) filing for Chapter 7 bankruptcy typically provides a VERY good outcome. Even if you do not qualify for Chapter 7, a Chapter 13 bankruptcy will still provide a far better solution in terms of a fresh new start than any credit card counseling company can provide.
How Can I Know What Type of Bankruptcy Is Right For Me?
You can read more about Chapter 7 vs. Chapter 13 bankruptcy here, or you can take advantage of a free initial consultation. Dan Kirby will help you understand how Bankruptcy Law can protect you, improve your financial situation and explain your options for moving forward.