Many Americans were severely affected by the recent economic recession. Many lost their homes and jobs. Others, who were able to hold on at the time, lost their homes due to severely decreased house values. As the majority of homes were now banked owned, the housing market averages dropped significantly. Those who held on would not be able to sell their house in this new market. The aftermath resulted in an entirely new wave of financially struggling individuals. If you are currently struggling financially to keep up with debts, you have probably considered bankruptcy at some point. Although bankruptcy is a little more difficult to achieve today, with proper documentation and the right legal team, you can fire for bankruptcy.
Causes for bankruptcy
Although underwater mortgages and too high of debt are the most common reasons for bankruptcy filings, there are many more causes. People who are unemployed may choose to file for bankruptcy, especially after a long stretch of unsuccessful job searching. A person who suffers an injury and is denied a disability claim may be forced to file for bankruptcy. People who sustain serious medial injuries and are required to pay high insurance or medical costs may also be forced into filing bankruptcy. Because bankruptcy filings are more difficult today, proof of your cause of bankruptcy might be important. It is also important to work with an experienced legal team, familiar with current bankruptcy requirements.
Proof of payment ability
Although there are two different types of bankruptcy, the most common, Chapter 7, still requires you to pay back your debt. However, instead of making individual payments to a variety of creditors, you may one, single, affordable payment to the bankruptcy holder. In order to qualify for this type of bankruptcy, you have to prove that you have the means to make the payments. Roughly 75% of Americans are living paycheck to paycheck, and 27% have no savings at all. Your bankruptcy legal team will help you gather the necessary income proof documents to successfully enter into bankruptcy.
The other type of bankruptcy, Chapter 13, although less common today, includes full removal of all debt. This form of bankruptcy requires more documentation and an even more experienced legal team. With an attorney, the success rate for Chapter 7 bankruptcy claims is over 95% (vs. 60% pro se) and the success rate for Chapter 13 is 55% (vs. .04% pro se). Working with an experienced family lawyer or bankruptcy legal team can significantly increase your chances of being granted a bankruptcy.
Importance of careful consideration
Bankruptcy should not be used as an easy way to get out of debt. The process itself can be expensive and lengthy. You are also only allowed one bankruptcy per 7 or 10 years, depending on the exact type of bankruptcy. If you look for an easy way out of debt and are granted a bankruptcy, you could be left with no options a couple of years down the road, when you really need the bankruptcy. Consider all aspects of the bankruptcy and go into detail about its implications with your bankruptcy legal team. Your ability to obtain new credit cards, vehicle loans, or mortgages may severely be hindered for a few years. If you miss your bankruptcy payments, you are at risk of losing your house and other assets. Evaluate your need for bankruptcy and ensure that it is the best option for your current financial situation.
The recent American recession severely affected many homeowners. In fact, many are still feeling the effects of that recession. Fewer than one in four Americans have enough money in their savings account to cover at least 6 months of expenses in the event of an emergency. If you are struggling to keep up financially, filing for bankruptcy may be an option. However, you will want to work closely with an experienced legal team. Evaluate your options, ability to make the bankruptcy payments, and if filing for bankruptcy is really beneficial for your situation.