File bankruptcy! No way! Filing bankruptcy is for losers! It’s humiliating!

When I entered the bankruptcy field in the mid 1980’s, that attitude was common. Some people still think that way today, however, there are also many that don’t. Over the last several years, well over one million people annually have filed bankruptcy. As a result, many know someone who has filed bankruptcy and gotten a fresh financial start. This has allowed them to obtain peace of mind, possibly enabling them to save money and buy their own homes. Now, many don’t see filing bankruptcy as such an unthinkable idea.

The bankruptcy laws were created to give a chance at a fresh financial start to those who find themselves in serious debt. The decision to the bankruptcy should not be an emotional one, but one based upon economics. The question should be: does it make sense for me to seek the protection of the bankruptcy court?

To evaluate whether you should file bankruptcy, ask yourself the following questions:

Is the amount of debt that you have more than 25% of your gross income?
Are you merely making the minimum monthly payments on your credit cards?
Are you borrowing from one credit card to pay another?
Have you missed any payments?
Are creditors calling you?
Are you receiving letters from your creditors?
Are you being sued?
Are you being garnished?
Are you behind in paying your mortgage or rent?

If you answer yes to one or more of these questions, you should consider the option of filing bankruptcy. For most consumers, the bankruptcy laws provide two different plans, the most common being Chapter 7, with the other being Chapter 13.

Under Chapter 7 of the Bankruptcy Code, an individual is allowed to keep certain assets, such as $2,500 in cash, pensions, IRA plans, a car with up to $2,400 in equity, a home with up to $50,000 in equity and most ordinary household possessions. A married couple can file together and double these amounts. Many people can file under Chapter 7, keep all of their assets and eliminate all or much of their debts.

An individual or married couple with too many assets or too much income to qualify for a Chapter 7 may be able to file bankruptcy under Chapter 13 of the Bankruptcy Code. In a Chapter 13, the person filing would repay some or all of their debts over a period of up to five years. Chapter 13 is most often filed when a person filing would repay some or all of their debts over a period of up to five years. Chapter 13 is most often filed when a person or married couple have more than the allowed equity in a home or have fallen behind in mortgage payments and want to keep their home.

For a more complete discussion of this subject, visit our website at aaalawyer.com/bankruptcy.htm. You may also call us at (718) 625-0800 to schedule a free consultation. During the consultation, we would thoroughly examine your circumstances and provide you with your options.