Posted by Hampton Young
“The fact is, out of all the possible reasons for going bankrupt, only three account for nearly 90 percent of bankruptcy: a job loss, a medical problem, or a divorce. And the fact is that those are exactly the kind of calamities that the bankruptcy courts were designed to help people through." — Amelia Warren Tyagi
“Bankruptcy – the safety net that society provides us when we get in over our heads and the gift of a fresh start – the new beginning of the rest of our lives.” — Mark Shaiken, Fresh Start
Today's economy finds many families only one paycheck between solvency and bankruptcy. Yet, bankruptcy is ultimately more affordable than sliding further and further into debt largely due to issues beyond our control.
Bankruptcy should be filed sooner rather than later if you are struggling to cover monthly housing, motor vehicle, utility or food expenses on top of high credit card or unreasonable medical expense obligations. Food and shelter, including utilities, are, of course, crucial, along with the absolute necessity of an automobile to access your employment, go to appointments or ferry the kids.
The anxiety, the loss of sleep, the concern for your loved ones due to the pressure of meeting and dealing expenses and the continuous phone calls from bill collector after bill collector can be all consuming. Unrelenting stress can lead to medical issues for the healthy, and exacerbation to preexisting and chronic medical issues.
Chapter 7 bankruptcy wipes out many kinds of debt, including: credit card debt, medical bills, personal loans, civil judgments (except for intentional torts or fraud), past-due rent, past-due utility bill, business debts, some older tax debts. There are debts, such as child support and recent tax debt, which are not erased by bankruptcy. Discharging student loan debt, unfortunately, is not generally dischargeable. However, eliminating other debts can give you the financial ability to repay what remains.
The key is the “automatic stay” which goes into effect immediately upon filing. The “automatic stay” halts almost all collection efforts, including lawsuits and wage garnishment. Once the underlying debt is erased with a bankruptcy discharge, a “discharge stay” goes into effect and the lawsuits and garnishment end.
It operates as an end to collection hell. Typically, once people fall seriously behind on their debt financial troubles tend to get worse. Late payment penalties go into effect and balances in collections and court judgments grow.
So bankruptcy can, in fact, be good for you and yours. Bankruptcy stops collection calls, cuts off lawsuits and cancels wage garnishments. Unsecured debt is wiped out, erased, gone. It's better than tranquilizers for the economic soul. It's more affordable than losing most everything.
Hampton Young Law is here to help.
