Bankruptcy can be a terrifying and daunting idea.  As an individual with no experience in bankruptcy, it might even seem an impossibly difficult task.  In truth, bankruptcy is a last chance option, and one ought only to consider it in the face of dire financial circumstances.  That said, the process will go much smoother with the help of a bankruptcy lawyer.  A bankruptcy lawyer can also help you decide when the best time to file for bankruptcy really is.

When Should You Consider Bankruptcy as an Option?

The following are some of the top reasons to consider filing for bankruptcy:

• Stop collection calls! One reason to file for bankruptcy now is to stop the collection calls.  If you, or someone you know, is suffering from the harassment of bill collectors, you might know how life altering that can be.  Bankruptcy has the fortunate effect of stopping that obnoxious behavior.
• Stop foreclosure! Imminent foreclosure on a family home can overturn your entire life.  Filing for bankruptcy might help stop or slow down the process.
• Stop repossession! The same goes for car payments. If you are behind on your car payments, bankruptcy may stop the efforts of repossessors and save your car.
• Avoid creditor discharging! Another reason to file for bankruptcy is to avoid your creditors discharging your debt.  While that might sound like a good thing superficially, the problem lies in the tax concerns.  If you creditor writes off the debt as a loss, the IRS will charge you income taxes on that amount, and that amount will not go away.  So if you are unable to pay the taxes, your problems will only multiply.
• Save your credit score!  Every missed payment to creditors drops your credit score down even further.  Thus, it could benefit your score to file for bankruptcy, despite how counterintuitive that sounds.
• Avoid judgment liens! A final reason that bankruptcy might pose best option is to avoid judgment liens.   If you are currently involved in a lawsuit or are concerned that you will be sued in the near future, bankruptcy can save you from judgment liens that will NOT go away after you file for bankruptcy.

What Kind of Bankruptcy Should You File For?

In Indiana, there are two different types of Bankruptcy for which one can file: Chapter 7 and Chapter 13.  Generally, Chapter 7 bankruptcy in Indiana is a fresh start.  In other words, filing for Chapter 7 bankruptcy is essentially selling off, or liquidating, all of your assets (except for any that fall under specific exemptions).  The cash coming from that sale is then given to your creditors.  Chapter 13 Bankruptcy, on the hand, is a more gradual process.  When filing Chapter 13 Bankruptcy, a plan is set forth, ranging from three to five years, that outlines payments of the debts to pay off any creditors.

Get Help

If you or someone you know is considering filing for bankruptcy, the first step is to consult a bankruptcy attorney.  Christopher L. Arrington has the bankruptcy experience that you need to help you consider your options.  Call our office today or visit our website for more information.