When a person or other entity is unable to repay their debts to creditors, they are may have to declare bankrupt. Bankruptcy is imposed by court order by the debtor in most jurisdictions. Businesses and individuals can file for Chapter 7, 11, or 13 bankruptcy in order to eliminate debts or repay a portion of what they owe. Getting out of debt can be made easier through bankruptcy, and it can negatively impact your credit long-term if you don’t file. You will be less likely to be approved for credit cards and loans at favorable interest rates.
An experienced attorney can help you navigate the bankruptcy process as smoothly as possible as it can be quite complex in Georgia. In bankruptcy proceedings, the attorney assists you with all applicable rules and regulations. You can learn all the requirements for filing for bankruptcy when you receive credit counseling. Having your debts evaluated by a credit counselor who is government-approved will help you demonstrate your inability to repay them. With Chapter 7 bankruptcy, unsecured debt can be eliminated and repossession or foreclosure can be stopped. Utility shut-offs, wage garnishments, and debt collection actions can be stopped with this approach. However, fees for court costs and legal representation are your responsibility.
Chapter 7 Bankruptcy
In bankruptcy proceedings, people also refer to it as straight bankruptcy, a term they know well. The process is sometimes known as liquidation. It involves disposing of all non-exempt resources and paying off creditors. As you begin a new debt-free path, your monthly payments must be manageable to allow you to move forward quickly. A federal court trustee supervises the sale of any non-exempt assets in this type of bankruptcy.
Profits from sales can be used to pay creditors. If your case is discharged, your remaining debt is eliminated. The negative bankruptcy information will probably stay on your credit report for 7 to 10 years after the filing date. It is likely that you will also lose your property. You can quickly eliminate your medical debts, credit card debts, and property that you may not want to keep by filing for bankruptcy.
Reasons For To File Bankruptcy
There are several situations that can cause financial stress, some are:
Job Loss
Filing for bankruptcy is often seen as a sign of living beyond poverty by many people. Bankruptcy is most commonly caused by job loss. Default rates have risen due to the rise in unemployment. Oftentimes, businesses fail and employees are made redundant, resulting in income losses.
Losing a job means less money to pay expenses and being unable to cover expenses with the proper financial means.
Mismanagement Of Finances
Bankruptcy can result from excessive spending and borrowing. Overspending can lead to having more debt than you can handle. You could default on your credit card debt if you do not manage to pay off your debt in a timely manner and do not have sufficient savings for emergencies. If a person has college loans, they may become a problem for their partner after the payment period is over. Making a purchase that you cannot reasonably afford can damage your financial situation. A budget allows you to keep track of your income and expenses, avoiding financial mismanagement. In addition to spending what you earn, it helps you establish a savings plan for paying off debts that lead to further debts.
Unexpected Disasters
Bankruptcies can sometimes result from things we cannot control. These come from circumstances beyond our control, such as natural disasters, fires, repairs, and catastrophic events like family deaths. A good way to avoid becoming bankrupt is to have adequate savings and insurance.
Medical Emergencies
Health insurance may not be able to cover or treat some medical problems. Unexpected expenses can put a person in a situation they didn’t anticipate. It is probable COVID-19 has put a lot of financial strain on American families that we aren’t hearing about. One can simply ask the question, did you cause COVID-19? If the answer is no but you’re affected by it you should really consider all of your options. Unless you declare bankruptcy, you cannot drown your medical debts. Your income might be reduced if you have to stay home to recover from health problems. It is possible to receive disability income when paying for medical costs with a credit card without having supplemental insurance. People who lead a healthy lifestyle may benefit from it when they suffer a catastrophic illness or injury.
Divorce
DivorceDivorce and separation can cause a heavy debt load, which is very difficult to manage. When couples separate, they have to pay the bills of two households with the same income. Separation involves additional legal costs that they need to pay.
How To Avoid Having To File Bankruptcy
Inadequate spending and savings habits can lead to a dire financial situation. Managing finances well can be achieved by practicing the following:
Make a budget and cut spending
Calculate your monthly spending. A budget is the quickest and easiest way to handle your spending habits. Consider paying in cash whenever possible. Do not use your credit card by locking it in a drawer or leaving it in the care of a friend. It is possible to downsize your credit card if you cannot convert to all-cash existence. During the holiday season, don’t indulge in expensive things like fine dining and gifts. Learn to cook more and eat out less.
Earn More Income
To pay living expenses in cash, you need to earn enough money. Take on more jobs or start a business so that you don’t go bankrupt. See a need, fill a need. Additionally, you could sell items you purchased that you really don’t need.
Look Into Settling or Consolidating Debts
Consolidating debts with lower interest rates is one way to avoid bankruptcy. Spending sprees are possible when you are not under pressure to pay your debts. The debt relief company can negotiate with your creditors to reduce the amount of your debt through debt settlement.
Feelings Caused by Financial Stress
Being in a situation of overwhelming debt can have negative emotional repercussions. In this process, you’ll experience the following emotions:
Denial
Deficit spending is not something people can do endlessly, although they may believe they can. Consumers often disregard the deteriorating condition and spend compulsively. They do not deal with the situation until there is the threat of foreclosure, legal action, credit denied, and harassing phone calls from debt collectors. There may be debt denial or underestimation of how much a person owes. They leave the bills unopened and do not answer the phone when the collection agency calls. People assume that they are all in the same boat and start applying for new credit cards. The defense mechanism of ignoring the facts results in interest charges and late fees piling up over time.
Stress
Lack of sleep, poor concentration, and a nagging worry are signs of stress. It negatively impacts your finances since you fear losing your job.
Depression
Denying, freaking out, and getting angry over debt can lead to depression. Bills are staring back at them, so they start thinking a lot. Losing your job or income can have a negative effect on your mental health. Sleep and eating may be affected, alcohol consumption may increase, and chronic conditions may worsen. You may feel hopeless and have low self-esteem as a result. Trying to relieve depression by going on a shopping spree to treat oneself can result in more debt. Debt can increase when one is depressed and in despair. Regardless of whether people are hurt by debt or by pain, they are still hurting.
Anger
People become madder as the economy sags. It is only through anger that you begin to wonder why you must struggle while others are comfortable. It’s easy to blame people you think are responsible for your problems.
The anger issues arise from creditors who sent bills, bosses who wouldn’t pay more, spouses who didn’t make more money, themselves who needed to get fixed, and kids who wanted new things. The psychological effects can lead to heart diseases, migraines and reduce resistance to infections. Many people around Metra Atlanta suffered from mental health problems, which led many to perceive suicide as a legitimate option.
Guilt and fear
It can be emotionally draining to have financial problems when you have family and friends depending on you. If you have debts, you may feel guilty that you are not providing better for them. There is a possibility that things will get worse or that you will disappoint those who count on you. It is an uncomfortable sensation that makes it hard to focus on how to get out of debt.
Shame and remorse
The feeling of shame or embarrassment is acute for people who are drowning in debt. Despite their financial problems, they refuse to admit it. When you have these feelings, you don’t want people to know because they will think that you’re weak. When you have overspent or wasted money, you might experience remorse. In the end, unless you believe it was your fault, you cannot change anything.
Fear and panic
Late payments can cause people to become uncomfortable, have rapid heartbeats, dry mouths, headaches, shortness of breath, and shakes.
Tips For Dealing with Financial Woes
At the end of the day if you need to file it is your choice, if the financial burden is too severe to manage do what works best for you and your family. Filing bankruptcy gives you the tools to make practical financial decisions that will assist you in repairing the damage done to your finances. Here are some ideas to help you get over the negative emotions associated with financial stress, you can do the following:
To Commit to A Brighter Financial Future
Because of what has happened, you cannot beat yourself up. Even if you made a mistake, you should find a solution to the problem. Prepare for the future by learning from past mistakes.
Educate Yourself
Educate YourselfA tool like this can help you cope with the negative emotions you feel about bankruptcy. You can enroll in credit counseling to gain more knowledge about bankruptcy. It is often required to file for bankruptcy under basic counseling programs, but you can continue the process after bankruptcy. Learn how to manage debt and credit so that you can make the most out of it moving forward.
Understanding Bankruptcy Is A Tool
You shouldn’t feel bad about declaring bankruptcy but rather realize it is a tool that can help you grow. Bankruptcy has many negative connotations, most of which are misdirected. You should make a greater effort to improve the situation and create an organized environment in the future.
Getting Assistance from A Bankruptcy Attorney
It is possible to file for bankruptcy with the help of experienced professionals. You will feel confident in your decision after the professional answers all your questions. As a result, bankruptcy becomes less of a threat. For instance, a bankruptcy lawyer from Atlanta can help determine whether bankruptcy is the right choice for you. When you know it is the right thing to do, you can file bankruptcy with clarity and confidence.
Benefits of Filing Bankruptcy
When bankruptcy is used to reorganize businesses and design profitable plans, it can be beneficial. This can prevent the bleeding of assets for small business owners. Bankruptcy has the following benefits:
There Is Automatic Stay Against Creditors
A stay of all collection activities is automatically granted by the court. Until the bankruptcy case is completed or the stay is lifted, debt collection proceedings are suspended. This means that there will be no calls from debt collectors, lawsuits on the debts, wage garnishments, property repossession, and home mortgage foreclosures. Upon receiving a court order, creditors who collect debts can stop collection attempts, refine them, and make them pay for damages.
Protect Your Properties
There are several exemptions under Chapter 7 bankruptcy, also called liquidation bankruptcy. Exemptions can include cars, land, housing, furniture, household items, and clothes. Retirement accounts are protected by it.
Eliminating Your Debts
Bankruptcy has the benefit of wiping away or dramatically reducing a person’s debt. Eliminating debts is legally known as a discharge of debts. Following the declaration, the debtor is not legally bound to pay the debt. According to Chapter 7 bankruptcy, some debts are not dischargeable, such as child support, taxes, student loans, alimony, and illegal activity. Other debts can be wiped out, such as medical debt, payday loans, most secured loans, and credit card debt.
What’s Next?
If you are confused, conflicted, or have more questions about filing for bankruptcy, we understand. It can be very stressful and complex and The Wright Law Alliance is here to help you through each stage of the process. You can get in touch with us at (404) 373-9933. You can also book a complimentary consultation with us (Here)
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