How To Know Whether Bankruptcy Is the Best Option

Wondering If Bankruptcy Will Solve Your Problems?

While there is no hard and fast rule regarding the determination of whether bankruptcy is your best option, there are some guidelines or principles that can be helpful in knowing whether bankruptcy will benefit you. Here are a few common examples of financial problems which bankruptcy could solve for you:

  • Snowballing debts.

If your liabilities are so high that you’re paying mainly interest and are continuing to grow, bankruptcy could help stop the bleeding. By hiring a dallas bankruptcy attorney, you can protect yourself. Through bankruptcy, you may qualify to have these debts stopped, and in other cases, such as with a mortgage loan, you can remove penalties and interest while getting your mortgage back up to speed.

  • Medical Problems.

If you have suffered serious medical problems without insurance or the portion for the medical bills for which you’re responsible is numbering into the the thousands or even tens of thousands of dollars, bankruptcy can help you “heal” your financial problems, too.

  • Job-Loss, or Significant Loss of Income.

In situations where you have lost your job and cannot continue to pay on your unsecured debts, you could be forced into a situation where you have to choose between either paying essential bills like car and house payments or to pay your credit card bills. You can protect your assets and keep the ability to pay essential bills, while eliminating unsecured debts like credit cards.

  • Late On House Payments.

If you have experienced a temporary break in income, and have become late on house payments such that the mortgage lender is threatening foreclosure, a chapter 13 bankruptcy could help you get back up to date on your house payments, while keeping the lender from foreclosing on your home.

  • Lawsuits.

If you have been served with a lawsuit, or have discovered a lawsuit through some other means, bankruptcy can stop the lawsuit, or make it go away if they have already obtained a judgment against you. If you have old credit card balances or other debt, these creditors or the collection companies who buy these debts could sue you to attempt to recover money. They often add significant late fees, attorney costs, and interest causing the amount on the lawsuit to be astronomical. Bankruptcy can make these lawsuits go away.

  • Garnishments.

If your bank account has been garnished, they can freeze your bank account. If you receive payment from your employer through direct deposit, or receive money from other retirement income and other sources, you could wake up to the extremely unpleasant surprise of finding your bank account garnished. Bankruptcy can help you remove this bank levy/garnishment, and keep these from happening again in the future.

Bankruptcy Solves Financial Problems

Because bankruptcy offers powerful legal protection against creditor and collection actions, you may be able to receive nearly instant financial relief for your situation. Chapter 7 bankruptcy allows for the complete or nearly complete elimination of unsecured debts, with the exception of certain debts like student loans, child support, and liability incurred as a result of criminal activities. Chapter 13 bankruptcy allows for you to pay back certain secured creditors over time, allowing you the necessary breathing room to stay in your home and/or vehicle if these payments have become seriously delinquent.

Do You Have Old Tax Liabilities?

If you have old tax liability and the IRS is threatening garnishment or you have worked out a payment plan with the IRS but have other serious financial responsibilities, you may be able to discharge your IRS debt alongside other unsecured debt. There are qualifications for such discharge, such that you will be generally required to have filed your regular returns for the years in which the tax liability was incurred. Additionally, 3 years must have passed since the time when the taxes were incurred. If you have questions, give our office a call and we can discuss your options with bankruptcy regarding IRS debts.