Bankruptcy filings increase during periods of economic crisis. For instance, a total of 630 US companies declared bankruptcy in 2020, drive by suppressed economic activities and business closures during the pandemic, according to analysts at S&P Global Market Intelligence.
The decision to file for bankruptcy is not an easy one. People tend to struggle financially for two to three years, on average, before taking this decision, according to research by the University of Illinois.
If you are facing debt problems, take a look at some circumstances that make it crucial to seek legal recourse.
You Have Large Amounts of Unsecured Debts
When you have a significant amount of unsecured debt, such as personal loans, business debt, medical bills and credit card bills, filing for Chapter 7 bankruptcy could help you. Once the bankruptcy petition is filed and creditors are informed, they have to stop all actions against you, including foreclosures, collection calls and more, temporarily. Moreover, often in New Jersey you may be able file bankruptcy while keeping your assets that fall under exemption, such as your car and home, retirement accounts and other exempt items.
You Earn Too Much to Qualify for Chapter 7
If you don’t have enough money to pay your debts, but at the same time you don’t qualify for Chapter 7, Chapter 13 bankruptcy could help you. The debt repayment structure utilizes your existing income to calculate how much you can use for living expenses and what percentage you are required to pay towards debt. This could be a proactive way to rebuild your finances, without going down the Chapter 7 route and its extreme measures. A bankruptcy lawyer will help you determine whether you qualify for Chapter 13, based on the household income requirements in your state.
You are Facing the Most Difficult Circumstances
When you are constantly being harassed by creditors and bill collector calls are causing extreme mental stress, it’s time to hire a skilled bankruptcy attorney. Filing for bankruptcy in such situations could help secure your mental and physical well-being and allow you to work towards rebuilding your finances.
Often people drain valuable resources, such as retirement funds and other protected assets, in an attempt to avoid bankruptcy. Consider the costs of putting this on hold, when bankruptcy is inevitable. Rather, seek the help of a qualified lawyer since bankruptcy has long-term legal and financial consequences too.