Bankruptcy Attorney

bankruptcy-law

Bankruptcy Attorney – When You Need Financial Protection

If you are in a dire financial situation and you’re considering bankruptcy as an option, call us today. Attorney Lawrence Coogan will sit down with you and discuss all your options. Call us today to setup a meeting and get the process started.

What is bankruptcy law?

Bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation.

Most cases are filed under the three main chapters of the Bankruptcy Code – Chapter 7, Chapter 11, and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.

Recent patterns for filing bankruptcy reveal that personal bankruptcy is rising considerably. According to the US Bankruptcy Court Statistics, there are more than 1.5 million bankruptcy applications filed every year. Surprisingly, about 97 percent of bankruptcy applications are from individuals and not by businesses.

Here are the topmost reasons why people file bankruptcy:

Medical Costs

For Americans who consider this last effort to salvage their finances, one of the top reasons why they file for bankruptcy is because of the costs of health care.

A recent finding from a group of academic researchers established that 66.5 percent of all bankruptcies are tied to medical matters. Most Americans could not afford the high costs of medical health care, and they have so much unpaid time when they are out of work. The research further emphasized that more than half a million American families resort to bankruptcy every year because of high medical bills and costs.

Mortgages

Another reason for bankruptcy in the US is because of high-priced mortgages. Statistics have established that 45 percent of bankruptcy petitions are performed to prevent property foreclosures.

Overspending

Overspending accounts for 44.4 percent of bankruptcy in the US. With rising inflation, managing money can even be more challenging than ever.  Uncontrolled spending combined with bad budgeting can be the recipe for falling deep into debt, eventually leading to bankruptcy.

Credit Card Debts

Credit debt is not just because of uncontrolled spending. Sometimes, credit card debt can be a result of piled up unforeseen expenses like emergency expenses, job loss, decreased income, illness, and disability.

Job Loss

The impact of losing the primary source of income in a household can be devastating to the budget. Losing your job can quickly drain your savings and assets even if you received a termination pay. Additionally, eligible Americans continue to pay the Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance after losing the job. COBRA insurance gives continuous health insurance coverage to the employee’s dependents. The down part is that there is no assurance of a new job coming.

Divorce

Divorce and separation can further push you deeper into a financial disaster. Aside from the costs of the divorce itself, divorce can mean loss of income, especially in women. In many cases, women have a lower income than men. When divorce happens, she is awarded the custody of the children, which can result in rising expenses.

Even when the court decides that the man should pay child support, being a single parent with dependents mean that you have to shoulder the daily household expenses alone. If you have incurred debt during the marriage, it can also drag you in paying a portion of your partner’s debt, especially if you co-signed or have joint accounts with them.

Providing Financial Help to Friends or Relatives

Family and friends who come to you to borrow money can pose a risk on your structured budget, most particularly if you are already on the brink of sinking. Consider carefully before lending friends and family. Helping close relative accounts for 28.4 percent of bankruptcy petitions. More often than not, friends and family will not be able to pay you on time or at all. Some people consider that because they are family or close friends, your gesture of lending them the money is a way of generous help that can often be mistaken as free help.

Loans

There are good and bad loans. Good loans are those that can help you earn more and can repay the loan with the profit you are making. Bad loans are those that don’t yield the return of investments. Incurring loans, including student loans, can delve you deeper into the state of bankruptcy.

While bankruptcy can be a sensible thing to do, some people have made a way to remedy their financial situation by combining their debts and avoiding the hassle of filing for bankruptcy.

Pros and Cons of Filing for Bankruptcy

For those who have been struggling hard to get by and filing for bankruptcy is the only way out, there are pros and cons you need to consider:

  • The first thing to realize is that it will significantly affect your credit standing for at least a decade. But the good thing is when you file for bankruptcy; you can start rebuilding your credit and put your financial problems in the past.
  • In addition, bankruptcy can also affect your eligibility to apply for a mortgage or a loan. However, there are agencies that offer special programs for people with bankruptcy to get a home loan. You may still pay a higher interest rate because lenders may consider you a high-risk borrower.
  • One benefit of filing for bankruptcy is you get a fresh start. You will still be required to comply with financial and credit counseling, but you will improve in handling your debts this time around.
  • By filing a bankruptcy, collection agencies and creditors will stop harassing you. You can peacefully sleep at night as the debts had been hauled up from your life.

Bankruptcy Laws

Bankruptcy can significantly decrease the burden of paying debt obligations, but it will depend on which chapter is used in the petition.

Chapter 7: Liquidation Bankruptcy

Chapter 7 Bankruptcy Law also known as liquidation bankruptcy or straight bankruptcy can eradicate or release loose or unsecured debts including personal loans, medical bills, unpaid utility bills, back taxes, wage garnishments, and credit card bill.

Liquidation bankruptcy can also eliminate a few of your secured debt usually tied to the property such as home or auto loan. If your home or car loan agency is threatening foreclosure or repossession, you may be able to deal with these matters through the Chapter 7 bankruptcy.

Chapter 11: Reorganization Bankruptcy

Chapter 11 Bankruptcy Law, also known as reorganization bankruptcy, prevents property foreclosure, repossession or interruption of utilities. It gives the petitioner to restructure their debt obligations into convenient payments over a long period of time, usually during a span of three to five years. In order to qualify for the Chapter 11 bankruptcy, your income and your wages must meet the required amount to fund your settlement plan.

The benefits you can enjoy when you qualify for the reorganization bankruptcy are the following:

  • Your debt repayment schedules will be set over three to five years.
  • It may remove a second or third mortgage.
  • It may save your home from foreclosure.
  • It stops creditors from harassing you.
  • You can move forward in your life with a fresh financial reboot.

It can be challenging to determine whether you qualify for Chapter 7 or Chapter 11 bankruptcy. The best thing you can do is to ask the help of a debt management lawyer to take a look at your specific case and help you understand when it comes to your legal rights.

You should take bankruptcy seriously because it can have long-term implications on your financial credibility. If you are considering filing for bankruptcy because of medical reasons, but you are in ongoing treatment, you should consider getting assistance from non-profit groups, ask for a discount from the medical facility or pharmacy, and even ask for help from friends and family. Only when you have tried all the available options to make your medical debts manageable should your resort to bankruptcy.

When to consult a Bankruptcy Lawyer?

The very first sign that you need to set an appointment with a debt management lawyer is when you have a huge amount of debt, and you do not have sufficient resources to pay it. At this instance, the help of a non-profit consumer credit counseling service can assist you in designing a new budget plan and offer practical financial advice.

If you are still struggling to pay off debt obligations, then you will need to consult a bankruptcy lawyer who can work in your favor by consolidating your debt, lowering it or restructure the repayment plan. Your lawyer will know the most suitable strategy in your situation, minimizing legal risks, including the risks of totally affecting your credit score negatively.

Timing is essential as to when you should petition for bankruptcy. Filing too early can jeopardize you with a hefty amount of bills that occur after the bankruptcy, which will be your responsibility. Bankruptcy only covers bills that you have already incurred when you file for medical reasons. Bills that come up after the petition will not be covered in any way. Your debt settlement or debt management attorney will work in decreasing your debt and giving peace of mind from your debt obligations.

 

Sources: https://www.allmandlaw.com/chapter-7-vs-chapter-13-bankruptcy/

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics

https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

https://www.huffpost.com/entry/top-10-reasons-people-go_b_6887642

If you are in a dire financial situation and you’re considering bankruptcy as an option call us today. Mr. Coogan will sit down with you and discuss all your options. Call us today to setup a meeting and get the process started.

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