People struggling to pay their debts often have the misperception that bankruptcy represents a failure in managing their income or personal finances. The fact is, nothing could be further from the truth. Laws enabling consumers to file for bankruptcy were created to provide honest, hard working people a fresh start. Rather than being something negative that jeopardizes your future ability to get credit or obtain a loan, when filed at the right time and under the right circumstances, it provides a way of stabilizing an otherwise bad situation, ensuring your financial future is more secure.
Knowing When to File for Bankruptcy
Under Title 11 of the U.S. Bankruptcy Code, there are two types of bankruptcy you may want to consider if you are struggling with personal debt.
Chapter 7 Bankruptcy: This involves a liquidation of assets. With secured creditor claims, such as for a car or home furnishings, the property may be surrendered or the debt may be affirmed, while unsecured debts are discharged, or eliminated. This is often used in situations where there is a drop in income, either due to a job loss or an illness.
Chapter 13 Bankruptcy: This involves a reorganization of your debts. It is generally used in cases in which the person is overwhelmed with debt, but has a steady source of income. It allows you to prevent and preserve certain assets, such as your home, while renegotiating payment terms.
Three Situations in Which Bankruptcy May Be Your Best Option
The following are three situations in which the Illinois Attorney General advises that filing either a Chapter 7 or Chapter 13 bankruptcy can protect you:
1. When Facing Creditor Harassment
Bankruptcy offers protection against creditor harassment, as well as against credit card companies and loan agencies who can ruin your credit rating. Once you fall behind on payments, the heavy interests rates and penalties these companies often charge can make repayment impossible.
2. Protection against Liens
Bankruptcy can protect you against having property or assets seized if a bank or debt collection company has filed a lien against you. Even if you currently face wage garnishment or have received a notice of foreclosure or repossession, filing bankruptcy may be able to put a stop to these actions.
3. Avoiding Potential Lawsuits
If you face legal action or a lawsuit as the result of personal liability or due to defaulting on a loan or other payment, bankruptcy may be able to help stop or delay these proceedings.
Reach Out to Us Today for Help
If you are struggling with debts or facing any of the above situations, contact the Law Offices Of Eric G. Zelazny to find out if bankruptcy might be the best option for you. With over 20 years experience in helping residents of Tinley Park regain control over the financial future, we provide trusted legal representation to guide you in taking the actions needed to protect yourself and your loved ones. Contact our passionate Tinley Park bankruptcy attorney to request a free case consultation today.