By Attorney Howard Iken: These days, many people are over their heads in credit card debt, medical bills, or have unwanted homes with little or no equity. Creditors may be constantly calling you, or you may have found yourself on the receiving end of a lawsuit. If you are in this situation and cannot see any way out, bankruptcy may be a good solution.
Many years ago there was a horrible image connected with bankruptcy. People that filed a bankruptcy case may have been seen as deadbeats, or thought of as doing something wrong. Once their friends or family knew, it because an embarrassing thing that gave people the impression you had severe problems in your life. Fast-forward to today … now, many people have filed or are thinking of filing. Many famous business people, retail chains, and common individuals have taken advantage of this federal law. The bad image disappeared and has been replaced by people able to start new financial – personal lives because their crushing debt disappeared.
Bankruptcy is a right that was written into the law by our congress and signed by the president. It was never intended as a method for people to cheat the system. But it was intended to help people in a hopeless situation regain the ability to participate in the economy and to help them begin new lives.
Let’s use a hypothetical example. Imagine yourself in a typical bad situation: credit cards maxed out or near maxed out. You may have missed a payment, or are getting near your credit limits. The credit card companies have you figured out through your credit report and start to consider you a higher credit risk. More often than not they respond by raising your interest rate to significantly higher amounts. Your minimum payments drastically increase and you begin to miss more payments. Another common problem that happens at the same time is that you begin to struggle with your mortgage payments and possibly miss some payments.
At this point you become the equivalent of “financial deadwood.” You have no credit, all your money is spoken for, there may be several lawsuits, and you are in a constant state of emergency. You are incapable of purchasing large items and services. Even small items and services may present a problem. That means you are not “feeding” the economy. Purchases create taxes that fund roads, government programs, and local services. Purchases create local jobs and help create small businesses. All of that financial activity is good for the economy and its citizens. Unfortunately, you cannot be part of the economy and have become deadwood.
A bankruptcy changes all those problems and clears out the deadwood. Because bankruptcy cleanly sweeps away most financial problems, your credit tends to recover rapidly. When all the lawsuits, debts, collectors, and credit problems go away – you have a chance to participate in the economy once again. This is good for you and good for others. That is the real purpose of the bankruptcy law – to get people participating in the economy once again.
The main type of bankruptcy is a chapter 7. That is what everyone thinks of when they refer to bankruptcy. It is short term and extremely beneficial. If done properly it is very low stress. And there is only one meeting to attend in the courthouse. A properly done chapter 7 bankruptcy will have the effect of erasing most or all of your debts, eliminate court judgments, freeze ongoing lawsuits, and protect some assets. A chapter 7 bankruptcy takes approximately 5 months to complete and you exit the case with a new financial beginning.
Howard Iken practices both bankruptcy and divorce in Tampa, and New Port Richey. A good coordination plan between your divorce and bankruptcy can achieve helpful results for many people. Our consultations are free.