Many of my clients come to me asking if bankruptcy is their best option. There are a few questions that you can ask yourself to decide if a New Jersey Chapter 7 or Chapter 13 bankruptcy is the best course of action for you.
Time It Will Take to Pay Off Your Debt:
If you will not be able to pay off or significantly reduce your debt within the near future, you may want to consider filing for bankruptcy. Before making any decision be sure to schedule a consultation with me so that we can review your options.
Medical Costs Are Out of Control:
Medical expenses can get out of control very quickly, especially if you or a loved one is ill. Many bankruptcies in the U.S. are due to overwhelming medical bills. Many people may avoid or delay medical treatment in order to not accrue more debt. Your health is most important. You can deal with financial issues later.
You’re At Risk of Losing Your Home:
Many clients come to me when they are facing the loss of their home. In a recent blog, I talked about the importance of continuing to make your payments. You will not lose your home simply because you filed bankruptcy.
Chapter 13 could be your best option if you are behind on your mortgage, but have a steady income. With this type of bankruptcy you are given the chance to work out a plan to catch up on your mortgage payments. The bankruptcy court also has a mortgage modification program. When you have completed the payment plan, the remainder of eligible unsecured debt will be erased.
Negotiations With Your Creditors Have Failed:
It is possible to negotiate with creditors as an alternative to filing bankruptcy. These types of repayment plans only works if all of your creditors accept your proposal and you can remain in the plan for the long haul. It doesn’t make sense to struggle for a few months and then later default. If you file bankruptcy later any payments made before hand will have been wasted.
You’re Using Your IRA To Pay Credit Card Debt:
Your IRA, 401(k) and 529 college savings accounts are generally protected during bankruptcy, so it is a bad idea to use funds from them to pay your credit card debt. It is a little known fact that if you take $10,000 out of your retirement fund, it could cost you $100,000 or more in lost future income. You may even go into more debt if you have to pay tax penalties on the withdrawals. You should contact an experienced bankruptcy lawyer before you consider withdrawing funds from your IRA.
While bankruptcies can take up to 10 years to be removed from your credit report, it may be your best option. I am here to help you weigh all of your options to come to the best decision for your financial future. Contact me today to schedule an appointment.
