If you’re dealing with debt and considering filing for bankruptcy, it’s a good idea to get professional legal advice on how to handle the proceedings. There are countless scams and “credit repair” cons trying to take advantage of your situation when you need help the most.
Credit counseling and debt management agencies may be able to assist you as you work, but with so many untrustworthy schemes out there, how do you know what the right step should be?
Should I File for Bankruptcy?
If you are deciding whether or not to file for bankruptcy, there are a lot of conditions to consider. Every person’s situation is different, and it’s a wise idea to talk with a qualified bankruptcy attorney about your options. Bankruptcy may affect your credit score (it sometimes can make your score better!), but it can also help give you a fresh start.
Whether or not you file for bankruptcy also depends on the kind of debt you have. Bankruptcy will wipe out credit card debt, medical bills, and personal loans, but will not eliminate primary obligation debt; things like student loans, child and spousal support, and newer tax debt.
Bankruptcy can also stop or delay a home or mortgage foreclosure, stop collection actions, stop garnishments and lawsuits.
What Do the Various Kinds of Bankruptcy Entail?
There are many intricacies that set Chapter 7 and Chapter 13 Bankruptcy apart. What does each one mean?
Chapter 7 Bankruptcy: A petition is filed in the Bankruptcy Court seeking a discharge of most types of debts. In exchange of this discharge non-exempt assets are liquidated by a Chapter 7 trustee in order to pay creditors back something. Most Chapter 7 cases are what we call no-asset cases, which means that there are no assets for the trustee to take or sell.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy is a reorganization of debts for debtors with regular income. There are limitations as to the amount of debt you can have, and it is limited to individuals and sole proprietors. You get to keep your property but pay back a portion of your debts. A Chapter 13 can help people get caught up on a mortgage or car loans. It can help if a person is not eligible for a Chapter 7 for whatever reason.
How Does Debt Negotiation Work?
Debt negotiation means your creditor has agreed to accept less than the full amount of your debt as payment– it also means debt collectors can’t harass you for your payments.
What do you need to keep in mind though? Debt settlement with the wrong organization or a scam can destroy your credit. It can be costly with lots of overhead fees and can take years to reach a settlement. Consult with a bankruptcy lawyer about what your debt negotiation options are.
How Can I Stop Collector Harassment?
Debt collection agencies can be thoroughly unpleasant. Oftentimes, they only compound the financial stress you are feeling. While debt collectors can be persistent, the Fair Debt Collection Practices Act (FDCPA) was in place to stop collector harassment, and it’s good to stay educated about what debt collectors can and can’t do.
Also, it’s important to note that you should write the debt collector and ask them to stop contacting you. According to the FDCPA, they have to comply with your request. Stay educated about what debt collectors can and can’t do and state your rights if they step over the line.
What Are the Warning Signs of a Credit Repair Scam?
Millions of Americans file for bankruptcy each year, and there are plenty of unscrupulous agencies who are looking to take advantage of people who are looking for help with their financial situation. How do you avoid falling victim to a scam? What are the warning signs?
- The company wants you to pay a fee to repair your credit before they do so
- The company does not tell you your legal rights or tell you about free options you can take on your own
- They try to get you to create a new credit score by applying for an employee identification number instead of your social security number
- They tell you to dispute all information in your credit report or create a new identity
Sawin & Shea: Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.