No one ever dreams of filing for bankruptcy, even if they reach a point where they cannot pay their bills. But it’s essential to remember that most people don’t accrue overwhelming debt overnight, and it’s usually not a result of negligence.
Millions of Americans face massive debt from medical bills, credit cards and other financial obligations. A recent WalletHub survey estimates that 67 million Americans may not be able to pay their bills as a result of the current pandemic.
Understand how bankruptcy works
While filing for bankruptcy isn’t a pleasant exercise, it’s easier to accept once you understand how the process works and why it could actually be a good thing. Here are some examples:
- You don’t lose everything: When filing for Chapter 7, you are still likely to keep many of your possessions, such as a car, house and other “exempt” items. Your attorney will help you keep the things you need for day-to-day life while discharging most unsecured debt.
- Not all debts are forgiven: Chapter 7 and Chapter 13 can relieve you of most debt, but some exceptions exist, such as recent taxes, child support payments and any debt you accrued due to fraud on your part. Student loan debt can also be very difficult to discharge in our area.
- Bankruptcy can be the smart choice: If your debts are 50% of your yearly income and it’s unlikely you can pay them off within five years, bankruptcy may be a way to regain your financial freedom. There will be consequences, but it may still be a good option.
- Filing doesn’t equal “failure”: Too many people see bankruptcy as a personal shortcoming rather than a sound financial strategy to deal with overwhelming debt. While it may be challenging, think of it as one of the tools available to address your financial needs.
- Bankruptcy can restore your future: Filing for Chapter 7 or Chapter 13 will impact your credit for several years, but it won’t ruin your chances for a positive financial future. People who file may see their credit scores start to rebound within a few months.
Seek knowledgeable advice
While filing for bankruptcy can be an uneasy step for many people, it can bring immediate benefits, such as stopping bill collectors from contacting you. An experienced bankruptcy attorney here in Louisiana can help you determine whether it’s the best option to help you regain solid financial footing.