When is it Time to File Bankruptcy?

Whether you have medical bills piling up, or you have gotten in over your head with credit card debt, you may have already started considering bankruptcy. Bankruptcy is a big step, though, and it should only be used as a last resort. Still, if you are carrying a significant amount of debt you cannot repay, it may be time to consider this option. So, how do you know if it is time to take this step, or wait and see if the situation gets better? Below, our Orlando bankruptcy lawyer explains when it is time to consider this option more seriously.

Debt Collectors are Suing You 

If you have not made payments on your debt, it has likely been turned over to a debt collection agency. If you do not answer the debt collector’s phone calls or letters, they may take the next step and file a lawsuit against you. Defending a debt collection lawsuit is very challenging and if you lose your case, you may end up owing more in court costs and attorney’s fees.

Filing for bankruptcy can provide some protection against debt collectors and the legal action they take against you. After you have filed your bankruptcy petition, the bankruptcy court will issue an automatic stay. As long as the automatic stay is in place, debt collectors cannot contact you until your debt has been discharged or your bankruptcy case has been dismissed. This means any lawsuit against you is also paused until your case is finalized.

Your Wages are Being Garnished 

If a debt collector wins a lawsuit against you, they can take additional steps to garnish your wages. This means your employer is required by law to withhold some of your earnings and direct them to the debt collector. Your wages will be garnished until the debt is repaid in full. Even if your wages have already started being garnished, the automatic stay issued in bankruptcy can halt the garnishment. This can provide you with some financial relief, particularly if a substantial amount of your earnings were being withheld.

You Cannot Pay Your Bills 

An unexpected illness or job loss can financially devastate you. You may turn to your credit cards to pay for your daily expenses and bills, which can leave you buried in debt. If you cannot manage your debt load due to unforeseen circumstances that were beyond your control, you may be able to file Chapter 7 bankruptcy to discharge, or eliminate, your debt.

If you do not qualify for Chapter 7, you can file Chapter 13 bankruptcy. Chapter 13 bankruptcy will not discharge your debt. Instead, it reorganizes it into a repayment plan which gives you between three and five years to repay your debt. This may provide you with enough time to get back on your feet.

Our Bankruptcy Lawyer in Orlando Can Advise On Your Case 

At Anderson & Ferrin, P.A., our Orlando bankruptcy lawyer can advise on whether it is time to file, guide you through the process, and give you the best chance of a favorable outcome. Call us now at 407-412-7041 or contact us online to schedule a consultation and to get the legal help you need.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

law.cornell.edu/uscode/text/11/chapter-7