Filing Bankruptcy, Is It Right For You?
By Mark J. Markus, Attorney at Law
Have you lost a job or had your income reduced? Do you have unanticipated medical bills? Have your living expenses increased beyond what you need to make your normal minimum payments on your credit cards and other bills? The vast majority of people who need to file bankruptcy end up in that position through no fault of their own. That isn't intended to mean that people who file aren't responsible for their debts. They are. But the bankruptcy laws exist to enable people to get a "fresh start" when unexpected or unforeseen events occur to render them unable to pay their debts.
Whether to file bankruptcy is a serious decision and whether to file bankruptcy is something you should only make after consulting with a licensed bankruptcy lawyer. Depending on your circumstances, you may be eligible to file for either Chapter 7 Bankruptcy and wipe out most, if not all, of your debts without having to repay anything; or Chapter 13 Bankruptcy in which you propose a repayment plan to your creditor based on your income (which can repay anywhere from zero to one hundred percent of your debts), or even Chapter 11 which is essentially the same as Chapter 13, but more complicated and designed for businesses and those with higher debts and more assets.
Bankruptcy provides very specific and tangible benefits, which should be compared against the costs of filing, as well as alternate options for your situation. The benefits of deciding to file bankruptcy include discharging your legal obligation to pay your debts. This is obviously the biggest benefit. Bankruptcy also gives you the ability to start over with your finances (the so-called "fresh start"), and start rebuilding your credit. It is true that a if you file bankruptcy, you may temporarily lower your credit score (depending on what it was prior to filing), but filing any one of the bankruptcies gives you a definite starting over point from which you can rebuild your credit. This cannot occur outside of bankruptcy laws because people usually have multiple delinquent debts which continue to accrue interest and continue to be late month after month, so that there is no definite starting over point from which to rebuild your credit.
There are many other benefits to filing bankruptcy, such as the ability to avoid (remove) judgment liens that have already attached to property you own, the ability to purchase secured assets, such as automobiles, for their current market value, without necessarily having to repay the full balance due on them, and many other things.
However, a bankruptcy should only be filed after consideration of all available alternatives, such as debt consolidation, negotiation, refinancing, etc. Many times these other options are either unavailable, or simply not the best options for one's situation, but they should always be explored.
The biggest mistake people make is waiting too long to explore filing bankruptcy as a possible option. Many times, there are actions that can be taken to optimize the benefits (and minimize the negatives) of filing a bankruptcy, if it is properly planned for ahead of time. This doesn't mean bankruptcy will be best for your personal situation, but failing to explore it as an option early on, may leave you unable to file when you need to.
About the Author:
Mark J. Markus is a Los Angeles Bankruptcy Attorney serving bankruptcy clients in Southern California
Phone: (818) 509-1173
Website: Bankruptcy in Los Angeles
