This summer has felt busy in Newport which hopefully can only mean good things for the trajectory of our local economy. Many individuals out there are still struggling to survive, robbing Peter to pay Paul, and that is not a sustainable direction. There are options and bankruptcy is one of them. If any of the following sounds familiar then you need seek advice on how to get out of the hole and move forward.
Are you behind on ANY bills, whether utilities or credit cards? Are you borrowing from your 401K or refinancing your home to pay unsecured creditors (usually credit cards)? Are you getting calls from your credit card companies or collection agencies? Are you adjusting your income tax withholdings so you get the maximum in your paycheck every week? These are all very clear signs that your debt has become unmanageable.
Many will argue that borrowing from your 401K, adjusting tax withholdings or taking equity out of your home are far better options and less detrimental to your credit score than bankruptcy. There are several major counter arguments to those strategies: 1) Your credit score has probably already taken a huge hit. 2) The 401K loan and equity loan still need to be paid back and you have now taken a sizable chunk out of your future. 3) Death and taxes – both unavoidable – pay now or pay later. If these are choices you are facing, bankruptcy is an option you should explore.
There are two types of “consumer” bankruptcy, where your debt is not related to the operation of a business, Chapter 7 and Chapter 13. Chapter 7 is the “fresh start,” liquidation of assets and discharge of debt. When debt is discharged you are no longer legally obligated to pay it. Typically all of your assets, your belongings, your 401K and even your home, will be exempt from liquidation and you can keep them. Chapter 13 is a reorganization of debt and repayment over a period of three to five years, depending on the kind of assets you have and your level of income. The amount of debt repaid over that period of time is often just a percentage of the total amount you currently owe.
The bottom line is if you are facing these choices to stay afloat you need to speak with someone knowledgeable about your options. Don’t just rely on what you read (like here), make an appointment and talk to someone about your particular set of circumstances.
For more information go to: www.jacksononeill.com