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HOW DO I KNOW IF I NEED A FRESH START THROUGH BANKRUPTCY?
"I was
in a bad place in my life. Being a single mom trying to
raise children was hard on the budget. I got behind. But
thanks to you all at Gandy Law Offices, I have a new start." -
R.W.
Having called
us is a good sign that some part of you knows you're in trouble;
that your financial problems have gotten, or are getting,
out of control. One very reliable objective indicator
used to determine if debt has gotten out of control is whether
your monthly expenses are usually more than your monthly
income.
If you have back due
bills (taxes, child support, small debts to a number of creditors)
that you have been unable to take care of, then the odds are
that your finances are strained to the point where bankruptcy
may make sense. Another rule of thumb is that if 25%-30% of
your take-home pay is going for debts other than house payments,
then your debt is probably in the unmanageable realm.
Another indicator
may be if there is tension in your personal relationships
regarding money issues. It is usually better to
swallow your pride, put aside your vanity, and get rid of
money worries rather than jeopardize your most important
relationships with something that can be so easily taken
care of by the simple act of getting a fresh start through
bankruptcy. According to Congress, one of bankruptcy's
primary goals is to try and save marriages and preserve families
where money tension is straining the relationship. In
addition, if you are depressed about money issues then it
may be time to remove this cloud of despair from your life
by the simple act of erasing your debts out of existence
through this process.
Other indicators may
be specific to the type of debt: for instance, if the thought
of destroying all of your credit cards is unthinkable, or if
you have taken cash advances on one credit card to make payments
on other credit cards, or if you are routinely able to make
only minimum payments on your credit cards, then you pretty
well know your credit card debt is unmanageable. If you have
recently been denied credit then you know that your creditors
probably consider you to be insolvent. If one or more of your
creditors has referred you to "Consumer Credit Counseling
Service" (CCCS), or a similar debt consolidation service,
then you can conclude that your creditors have determined that
you are essentially bankrupt and that they hope to string you
along for a while making payments to CCCS (CCCS was created
by, and is solely funded by, the major credit card companies;
a notation on your credit report that you have used CCCS may
cause future creditors to deny you credit since generally only
people with serious financial troubles get directed to CCCS).
Other signs
can become such a part of your life and so routine that you
cannot even recognize the signals. For instance,
if you have to work overtime just to keep up with your bills
then you are probably in need of some financial help. If
coming up with the monthly car or house payment is always
a stressful challenge, then your budget is probably stretched
to the breaking point. Or, if you have taken more than one
major cash advance on your credit cards within the last year,
you probably do not have enough cash coming in to meet bills
and expenses.
How do I know
if I am eligible for a fresh start through bankruptcy?
“You guys rock.” -
L.K.
As a general rule, by
the time folks finally call us to ask questions about a bankruptcy
they are usually in relatively serious financial trouble and
have no problem at all qualifying for fresh start bankruptcy
protection. Generally speaking, if you feel you can't
make ends meet and need bankruptcy relief no one will argue
with you. At the same time, determining eligibility
for bankruptcy relief is a big part of what we do when we initially
review your paperwork. Most people who file Chapter 7 have
more in monthly bills and expenses than they have income to
cover those bills. Please call us to discuss your situation
in greater detail. You may very well qualify, even if you have
an income that is enough to meet your monthly bills and expenses.
It just depends on your total situation.
Common events that may
cause money problems include: retirement, loss of a job, too
much credit, gambling losses, tax underpayment, death of a
spouse, failure of a business, a recent, pending or planned
divorce or separation (please immediately call us about the
issues that can arise from this), loss of overtime hours, adverse
civil court judgments, excessive monthly car payments, illness
or mounting medical bills, injury at work or in a car, uninsured
accidents, excessive credit card interest payments, impoverishment
following lengthy schooling, loss of cash flow due to attempts
to start a new business, or simply an inability to keep up
with monthly bills.
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