Not A Failure
Filing bankruptcy does not have to be looked upon as a failure. Bankruptcy can be looked upon as an opportunity to get a fresh start or to reorganize debt under existing federal bankruptcy laws. I don’t believe anyone sets out to file for bankruptcy. However, certain events happen in life that leads to that result. For example, if you are someone who did not have health insurance and then had a catastrophic illness or injury, without bankruptcy you would likely never be able to get out of that debt. Perhaps you are someone who lost a job through no fault of your own and simply was not able to find adequate replacement work within a reasonable period of time. During the interim, you fell behind on your mortgage or your car payment or other bills. Maybe you took cash advances are charged on your credit cards thinking that things would turn around and that you would get back employed. Maybe you were in a dual income household and all of a sudden through breakup, divorce, or death; you were left with only one source of income to pay joint debt. Maybe you simply overspent thinking that you can have it now and pay for it later. Whatever the predicament, whatever the reason, bankruptcy is a way of getting back on your feet financially. There are a couple ways to do this.
Chapter 7
Under chapter 7 of the United States bankruptcy code, you are able to eliminate a significant amount of your debt and still maintain a reasonable amount of personal property. You could easily eliminate credit card debt, medical debt, personal loans, auto repossession deficiencies, and other types of unsecured debt. You can also keep a specific amount of equity or ownership in your home, your vehicle, your bank accounts, your 401(k), your life insurance, and other minor assets. Now there are some debts that are not eliminated in a chapter 7 bankruptcy filing. These debts include recent taxes, parking tickets, child support, maintenance payments, and debts incurred by fraud. Over 75% of all bankruptcy cases are of the chapter 7 fresh start type. A chapter 7 bankruptcy case can be filed once every eight years. Hopefully, if you had to file for chapter 7 bankruptcy, it would be the only time you needed to file.
Chapter 13
If you need to save a home that’s in foreclosure or otherwise reorganize debt you would do so under chapter 13 of the United States bankruptcy code. Chapter 13 provides for a repayment of all or a portion of your debt over a 3 to 5 year period of time. Chapter 13 basically works like this. You take all of your disposable income which is your monthly income minus your monthly expenses. Whatever that number is, that is what must be paid to a chapter 13 trustee over a three to five-year period. The trustee will then pay out to your creditors pursuant to a specific order. If you are trying to save your home from foreclosure, your mortgage arrearages can be paid back over a three to five-year period. You also have to make your regularly scheduled mortgage payment on time as your case is moving forward. If you are behind on your auto or otherwise want to reorganize the debt on your auto, this can be put into a chapter 13 repayment plan as well. Most debtors find that they can reduce the amount that they pay per month by putting their auto into a chapter 13.
You Must Decide
By taking advantage of existing federal laws, either under chapter 7 or chapter 13, you as an individual are making a positive change in your life. You are either getting a fresh start or a substantial fresh start or you are reorganizing your debt and repaying it or a portion of it over a period of time. You do not need to think of this as a failure. You need to think of it as a business decision moving forward. Do you really want struggle for month after month, year after year with debt? Do you really want to lose your home or lose your vehicle or pay exorbitant interest over the next 5 to 10 years? Do you really want struggle and be in stress over your debt situation? The obvious answer is no. So bankruptcy to me is not a failure. It is a fresh start or an opportunity to reorganize debt over time. Take it from me, clients wished that they filed bankruptcy sooner than later. I have many clients that wished they would’ve filed six months ago or a year ago. They simply continued to pay on debt at high interest rates with no end in sight.
Biblical Origins Of Bankruptcy
If you are someone who is struggling financially, please do not consider bankruptcy as a failure. Bankruptcy law goes all the way back to biblical days. Individuals were not meant to struggle for the rest of their lives with debt. For this reason, the biblical laws as well as the United States Congress put laws in place that gave Americans the right to file for bankruptcy. Now there are certain restrictions on bankruptcy filing. For example, there are certain timeframes in which you can file, and you must qualify. However, in my experience, over 99% of the people that I come across have a bankruptcy solution under one of the two chapters. If you need help, you can contact my office at 847-520-8100. It is a pleasure to help people get out of debt and get them back on their feet. For this reason, I have chosen bankruptcy as my primary practice area.
