Some Factors to Consider

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Some Factors to Consider

Post  Admin on Mon Sep 21, 2009 11:17 am

What are your total living expenses? Calculate the total monthly expenses for you and your dependents such as food, housing, utilities, transportation, insurance, clothing, medical care and some reasonable reserve for the unexpected. You will need an accurate list of these monthly expenses as well as a list of your total monthly income.

Whom do you owe money to? Make a list of all of your creditors. Identify those creditors you have pledged property to, the value of the property your creditors have an interest in and the monthly payments that you currently owe each creditor, as well.

Are you "judgment-proof?" When a creditor sues you they are seeking a "judgment" which is simply a legal order that you owe the debt. Armed with a judgment, a creditor can garnish bank accounts or wages or file liens against your property. You may be judgment-proof if you only have a few assets and they are not worth much; if your only income is from unemployment insurance, Supplemental Security Income or some other type of government benefits; or if you work and your wages are low enough. The effect of being judgment-proof is that creditors may not bother to sue you because they will not be able to "satisfy" their judgments against you. Creditors cannot take any property or garnish the income of a person who is truly judgment-proof. However, even judgment-proof people can and do file for bankruptcy relief – perhaps to stop harassing phone calls.

If your debts were erased, would your financial problems be over? Bankruptcy will give you a fresh financial start and will work best if you will have an income after the bankruptcy that is adequate to support you and your family. On the other hand, bankruptcy will only be a temporary "fix" if you go right back into debt again with no way of paying off the new debts. Chapter 7 is only available once every eight years. It is usually best to wait until you have reached the end of your financial problems before filing bankruptcy. Even if you have filed a previous bankruptcy, the court may allow you to file a Chapter 13 bankruptcy to deal with any new debts you may have incurred; however, this depends on the particular circumstances of your case.

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