Determining when it is time to file for bankruptcy is often a complicated process, but it can be simplified. In determining when bankruptcy is justified, three things normally happen before you make a decision to move on to file for bankruptcy protection.
First of all, creditors will apply various pressures on you possibly invoking debt collection procedures, law suits, garnishment, attachments, evictions, foreclosures, and the like. Selecting to do nothing about these types of activities can complicate the process to file and can create further debt in the form of interest, penalties, and fees.
Unless you are collection proof, meaning you do not have any assets for your creditors to go after, trying to outlast the statute of limitations in some states can be a cumbersome and harsh lifestyle within itself. The state statute of limitations on debt can range any where from a year to twenty years, and in some cases, creditors can extend those years indefinitely with a judgment from a court of law.
Secondly, selecting to do something about creditor collection activities can help you resolve some of your differences, or it can turn into a very frustrating experience. Often times, debtors will choose to alleviate their debt problems in a variety of ways. The most common way to alleviate a conglomeration of debts is to consolidate them into one payment. The only problem with this solution is whether or not you still have enough credit to obtain the consolidation. If you do, problem solved, but if not, many seek out a third party to help them consolidate, often frustrating the process and expenses.
Another way you may choose to alleviate debt problems is through either negotiating with your creditors or getting a third part to negotiate for you. Very few creditors will re-negotiate their contracts with a customer. A third party can be successful, but many times, they charge you for a product they often don’t deliver.
Finally, you realize there is literally nothing at this point you can do to solve your debt problems. You begin to understand there is a real possibility you are completely bankrupt and without the financial ability to pay your debts. You may even come to the place where you compare your income to your expenses to see whether or not it is possible to ever pay off all your debts.
Being bankrupt is much more a black and white experience than it is a gray one. As a general rule of thumb, you are completely financially bankrupt if your current sustainable income plus any cash reserves will not pay all of your living expenses, pay interest on outstanding loans, and reduce some of your principal on those loans while paying on them for five years. Depending on which state you live, the formula should not consider the current value of your assets owned outright including any retirement accounts. Paying off debts for five years is chosen because five years is the maximum legal number of years a United States Bankruptcy Court allows an individual to work their way out of bankruptcy protection.
After coming to this final conclusion you are completely bankrupt, your choices are now more simplified and justifying bankrupt is simpler. If you have assets to protect, you can file for bankruptcy protection invoking the automatic stay, common to all bankruptcy proceedings, and immediately prevent creditors from bringing certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment.
Justifying bankruptcy can be simplified, but bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.
If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Nashville, Tennessee, contact us here today at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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