3 Reasons Bankruptcy May Not Work For Your Situation
It's comforting to most people to know that the law offers financial protections for people who have made mistakes or had unforeseen bad luck. Bankruptcy is a tool that has saved many people from financial ruin, and it has helped many get out from debt that would otherwise never be paid off. If you are in a tough financial situation and looking at bankruptcy as an option to fix your problem, there are three reasons you should should consider a different solution.
1. Bankruptcy Courts Won't Consider Wiping Out Some Debts
After a long recession, many people are still trying to pay back loans they may have gotten behind on. There is a big student loan crisis in the country right now, and many couples who have a lot of student debt are struggling to stay out of default. Unfortunately, even though this is a problem for thousands of people, student loans cannot be discharged in bankruptcy. The same is true for money you may owe as defined by a court in a legal situation you've had. Student and legal debt can be overwhelming but bankruptcy isn't the right solution for eliminating these debts. As for student debt, consolidation programs might be your best option for reducing payment amounts.
2. Bankruptcy Courts Will Consider Weighing Your Assets Against Your Debts
Although you may be accustom to living a certain way, with certain things, a bankruptcy court may not accept your request for debt forgiveness if you have enough assets to liquidate. If you have a really nice home and a lot of real estate, cars, extravagant expenses, etc., you will likely be required to downsize your lifestyle to pay your debts rather than have them wiped out. If your debts outweigh even your assets, a Chapter 7 bankruptcy may still apply to your situation. You will still have to liquidate what you can, more than likely, to pay off some of your creditors.
Bankruptcy Courts Will Require Accurate and Thorough Proof of Your Financial Situation
In most cases, finding all of the documentation you need to file a successful bankruptcy can be obtained; however, if you are missing information about money you've lost, debts you've made payments on, and depreciation of different assets, you will have a challenge filing a successful bankruptcy. In situations where you've lost documents and institutions you owe money to won't help you obtain records you need, your lawyer may help you in obtaining such records.
Ultimately, bankruptcy is meant for people as a last resort. If you have means available to you to settle debts or downsize your life to pay those people or companies you owe, that is the best thing to do. If you are uncertain if you qualify, you can sit down with a bankruptcy lawyer like Wade Bettis, J.D., Ph.D., PC and can receive a consultation regarding your specific situation.