When America’s economy took a downturn in 2009, many were laid off and not many found a high-paying one which would allow them to maintain their life style.
Failing to earn enough to afford one’s needs and pay all bills, such as credit card billings and other monthly bills, then financial problems can easily set in. Before one even realizes it, there is a chance that his/her debts would have grown to an amount that may be impossible to manage.
Even today, this is one common scenario for thousands of Americans. Worse, after just about two or three months of lapsed payments, particularly to banks and credit card companies, a person’s loan or account would be considered as bad debt and he/she would referred to a collection agency which, more often than not, resorts to harassing tactics to make him/her pay.
Crushing debts have caused many individuals so much worry and stress; these have affected family and professional relationships, many of which getting destroyed. Debts, however, are not unsolvable problems, for the law offers legal alternatives to enable individuals with overwhelming debts to address their problem and regain control of their financial situation. One such legal solution is bankruptcy, a legal declaration of one’s inability to settle personal or business loans. One immediate and beneficial effect of filing for bankruptcy is that once it is filed, all attempts by agencies to collect debt payments will stop. This is called “automatic stay.” Creditors will also lose any right of having a debtor’s salary garnished or his/her bank account levied.
There are different Chapters or types of Bankruptcy laws that a person may apply for, depending on his/her financial standing, work or assets and properties. These are
- Chapter 7 or liquidation bankruptcy, which enables a person to pay his/her debts through the liquidation of some of his/her assets. With regard to business firms, these will need to cease operations, as a court-appointed trustee sells or liquidates all assets owned by these. Residual proceeds, after having paid all creditors, will be returned to the individual or business owners;
- Chapter 11, or business reorganization, the business owner usually acts as trustee (if the court does not appoint one); he/she also becomes a debtor-in-possession since the law allows continuous operation of his/her business and;
- Chapter 12, which is designed for farmers and fishermen with a regular annual income and who own the whole or more than half of the farming/ fishing business; and,
- Chapter 13, which allows a debtor to make a three-year or five-year proposal through which he/she could pay all of his/her debts.
Whatever the unique circumstances of your situation may be, you do not need to suffer under the weight of overwhelming debts. Most people do not realize the number of different remedies that exist which could help them get out a financial crisis. With the help of a skilled Bankruptcy lawyer, however, they may just be able to find the solution that will allow them to regain a strong financial foothold.