Bankruptcy and Debt Defense

Bankruptcy: Is It The Right Move?

Bankruptcy is a federal court process that helps consumers eliminate overwhelming debts or establish a plan to repay them. Depending on your income, circumstances, and assets, bankruptcy laws may give you a way to erase many financial obligations and start anew with your life.

But the question is, can bankruptcy help you? Bankruptcy is a personal decision and you should assess your own personal financial history to determine if it is the right decision for you. You must also consider seeking advice regarding the application of the bankruptcy code to your situation. Most people file bankruptcy because of crushing debt, often caused by financial hardship such as unemployment, lack of adequate insurance, catastrophic medical expenses, marital problems, overextended credit or, more rarely, out-of-control spending. And by seeking bankruptcy protection, they can alleviate the stress associated with mounting debt.

Bankruptcy laws were passed in order to give people a fresh start, routinely classified as chapter 7, or to give debt-burdened consumers an organized, systematic way of paying back creditors, often classified as a chapter 13. If you're over your head in debt and you are unsure how you will be able to repay all the money you owe, you might be interested in filing bankruptcy. Or, if you can pay back creditors but need to get out from under wage garnishments or repossession threats, you may want to consider bankruptcy.

Before making a decision to declare bankruptcy, face your current financial situation and assess the damage.

Review Your Credit History. The three largest credit reporting companies are Equifax, Experian, and TransUnion. Once a year, you are entitled to a free credit report from each company through AnnualCreditReport.com, a service run by the three agencies with oversight by the Federal Trade Commission. Order your free reports:

• Online
• By phone (877-322-8228)
• By mail (Download an Order Form from the website then send to Annual Credit Report Request Service, P.O. Box 105283, Atlanta, GA 30348-5283)

Assess Your Budget. Find out your current household budget to see if your expenses outpace your income and if you are unable to meet your daily household expenses.

Do Not Burry Your Head in the Sand. If you determine that you cannot meet your daily obligations, do not ignore your debts and the debt collectors. Ignoring the problem can lead to more problematic situations, e.g. attachments on bank accounts, wages, etc., that could otherwise be avoided if bankruptcy protection was sought earlier in the process.