Written by Canterbury Law Group

Why You Should Not File for Bankruptcy

In some circumstances, filing for bankruptcy is the only solution to deal with your financial crisis. For others though, bankruptcy is actually a bad idea and should be avoided.

Each situation will be different, depending on how much debt you have and what kind of debt it is. It’s essential that you seriously think about the benefits and downfalls of bankruptcy, and see if it is the best solution for your current situation.

Your top bankruptcy attorney in Scottsdale is ready to help you with all of your bankruptcy needs. First, though, see if your reason for bankruptcy is a good one.

Cannot Pay Small, Unsecured Debt

Unsecured debt is commonly known as past due to credit cards. It’s debt that has no outstanding collateral for the credit card company to seize from you. That means the lender lets you spend as much as you want without tendering any security in case you default on the loan. If you do default on your payments, there is nothing for the lender to repossess.  While they certainly can sue you, that again only gets them a judgment.  Eventually, that judgment will likely lead to garnishment of your banking accounts and a paycheck.

This isn’t to say that you can stop paying small loans and you’ll be fine. There are still issues involving your credit and the chance of the lender suing you in court. However, this is not a good reason to claim bankruptcy. In many cases, you or your bankruptcy lawyer can negotiate with the lender to set up a payment plan that works for you, or to pay a lump sum to clear up the debt.

There are also occasions in which the lender may write off your debt as uncollectable, but that isn’t a solution to rely on.

Student Loans, Income Tax, Court Judgment, or Child Support

Bankruptcy doesn’t necessarily erase all of your loans. In some cases, bankruptcy won’t help you with certain loans. Depending on what you owe, each situation is treated individually.

Filing for bankruptcy for debt like student loans, income taxes owed, certain court fines or penalties and child support won’t do you any good. There may be extreme cases when bankruptcy can quash this kind of debt. For the most part, though, bankruptcy can’t do anything about these types of debt.

Stop Collection Agencies from Calling

If you are wary of collection agencies calling you all the time, there’s an easier way to make them stop than filing for bankruptcy. Through the Fair Debt Collection Practices Act (FDCPA), if you request them to stop calling, they must oblige under federal law.

Send a written letter to the collection agency stating you do not want them to contact you anymore. If they continue to call after your request, keep a record of the phone calls, you can sue the collections agency later and potentially collect damages and fees.

Want to Restart

If you’re looking at bankruptcy as an easy way out of your debt, you may want to reconsider that mindset. For starters, there will be certain debts as we mentioned that will never go away after filing for bankruptcy.

Filing for bankruptcy is also hard on your credit. Bankruptcy remains on your credit record for up to ten years. That means if you want to take out a loan for a new vehicle or a mortgage, you may have a hard time being approved for many years to come.

Written by Canterbury Law Group

The Benefits of Filing for Bankruptcy

Most people perceive bankruptcy as a dreadful thing, like a complete end to financial stability and future prospects. This is a rather misguided notion of bankruptcy. Filing for personal bankruptcy does have its benefits other than reaching a legal solution to overwhelming debt. Don’t believe it? Read below to find out:

Stop the Never-Ending Collection Calls

One of the major positive aspects that follow declaring personal bankruptcy is the definitive end to collection calls. In Arizona, creditors are legally obligated to stop attempting to collect the debt when a debtor has filed for personal bankruptcy. Your creditor won’t be able to call you, try to foreclose your home, notify your employers, or do anything else to attempt to collect your prior debt. If the creditor harassment continues, you will have a good case for your bankruptcy proceedings. You should contact a bankruptcy lawyer in Scottsdale to find out what your options are if credit harassment continues.

Keep Your Home

Arizona law allows exemptions for homesteads or the primary residence owned by a debtor. The court will not make you homeless and take away your shelter when you file for personal bankruptcy. So it’s a sensible way to try to save your home from debtors. This exemption has a dollar and equity limits and certain exceptions that you should clarify with a lawyer. But filing for bankruptcy will stop a creditor from foreclosing your home.

Protect Personal Assets

The Arizona bankruptcy law allows many personal property exemptions when filing for bankruptcy. That means you would be able to keep valuable assets like books, furniture, cheap motor vehicles, various electronic gadgets, family antiques, clothing, pets and so on in your possession. Creditors will not be able to claim these as collateral.  They are prohibited from taking your things.

Stay in Control of Business

Chapter 11 bankruptcy allows business owners control of their company even after filing for business bankruptcy. So it’s a good way to keep a business afloat when the debts threaten to run your company to the ground. The Chapter 11 bankruptcy also facilitates business owners to reduce debt gradually over time.  Chapter 11 can also aid in getting rid of high-stakes litigation by discharging the pending litigation claims that were previously being waged against your company.

Retain Your Pension Fund and Retirement Assets

You can retain your considerable IRA or other types of qualified retirement plans or pensions when you file for bankruptcy. It’s one another valuable personal asset that will be kept away from the debtors. Put another way, you will exit bankruptcy with virtually identical retirement assets as when you went into bankruptcy.

Start Improving Your Financial Status

When you file for bankruptcy, your credit score would hit rock bottom. But afterward, it will start to climb up again, sometimes rapidly. Filing for bankruptcy is sort of the last step towards regaining financial footing and security. After that, it only gets better. When you start to make debt payments, your credit score would start rising again.  Many creditors are attracted to persons coming out of bankruptcy and offer them credit because they know that the person cannot file another bankruptcy for many many years.

Have a Trustee Oversee Your Monetary Affairs

During your bankruptcy, the court appoints a Trustee between you and the creditors to oversee how the discharge on your bankruptcy filing is being carried out. This spells only good things for your future financial dealings. If pursuing a chapter 11 or 13, you will get a handcrafted debt repayment plan to get back on your feet after the declaring.   If pursuing Chapter 7, most if not all of your debts will be canceled.

Above all, you will feel less stressed. Your money matters will be taken care of, and the creditors will finally go away.  Consider speaking with competent bankruptcy legal counsel today.