Filing bankruptcy is not something to take lightly. However, there are times when filing is necessary, such as when collection activities are constant because there are no assets or savings to repay debt. Furthermore, the debtor’s car may be repossessed or the mortgage holder is threatening foreclosure.
Bankruptcy May Be the Best Option
It is common for creditors to sue debtors to get a judgment. They can use the judgment to garnish paychecks and bank accounts. An automatic stay is issued when a bankruptcy is filed. This means that all collection activities, including foreclosure and repossession, must stop. Talk to a bankruptcy lawyer in Lawrence, KS to discuss your options.
High medical bills are another reason to file bankruptcy. Many consumers are unaware that a hospital can put a lien on property for unpaid medical bills, which makes it more difficult to refinance or sell a home. Individuals are also sued for unpaid medical bills.
Where to Begin?
A bankruptcy lawyer in Lawrence, KS advises clients to gather paperwork. Indeed, all of one’s debts should be included in the bankruptcy. There’s no need to file unless you get a fresh start. The addresses and account numbers for the debts need to be collected. In addition, debtors must have credit counseling before filing.
Chapter 7 or Chapter 13?
Chapter 7 filers sell some of their assets to settle debt. Basically, they are claiming insufficient income to pay all creditors. As a result, much of the unsecured debt will be discharged, which is why chapter 7 filers must pass the means test. The test determines whether or not the debtor is really able to pay.
On the other hand, chapter 13 filers make a monthly payment to the bankruptcy court. The payment is divided among their creditors. In addition, any arrears on secured debts are paid through the bankruptcy court. However, the debtor must still make the current monthly payments.
The monthly payment is a large portion of an individual’s disposable income. Many debtors find it difficult to survive on what is left at the end of the each month. However, sticking to the plan pays off in the end. For more information, contact Attorney Joe Wittman.