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Why Starting Over With Bankruptcy May Be Right for You

It’s hard to think about starting over when you have worked so hard for the success you once had, whether as an individual or a business. However, bankruptcy is sometimes the best option to get out of an unsustainable financial situation that is putting you under extreme stress. 

If you are facing considerable debts and can’t afford to keep your head above water, it is time to consider your options. The first thing you should do before diving into bankruptcy is look at your budget and contact creditors. All too often, debtors ignore debt problems, believing the creditor will expect them to bring payments up to date immediately. The truth is, most creditors have options available to help you get back on track. 

Contacting Creditors

You can contact creditors yourself or seek advice and support through a credit counseling program. There are a large number of credit counseling companies that are nonprofit, which means they will not charge you for the services you receive or fees may be small. There are also companies that will charge exorbitant fees for counseling and representation. 

If you choose to contact creditors yourself, be upfront about your financial situation and inability to keep up with repayment plans. The options available to you may include settlement, which involves paying one lump-sum to pay off an agreed-to amount to settle the debt; temporary forbearance that reduces interest rates or monthly payment amount, deferring the deficit to the end of the loan; or modification of the loan for a lower monthly repayment amount over a longer term. 

These options are not guaranteed, and it is important to ask for the terms of any agreed modification in writing. If a creditor agrees to temporary forbearance, you may need to make up the difference once you are again in a financially stable position to bring payments up to date. That means higher repayments until the missed payments or interest is paid in full. A settlement also may have tax consequences, and you should consult with your accountant to determine how a settlement may affect you.

Filing for Bankruptcy

If your debt is such that you cannot confidently repay creditors as part of a modification-of-terms arrangement, bankruptcy may represent the most suitable option for your circumstances. It is important to discuss your finances with an experienced bankruptcy lawyer who can provide excellence in advice and guidance throughout the process. 

You may file for Chapter 7 bankruptcy if you meet certain qualifications. A court-appointed trustee will sell off your nonexempt assets, if any, to repay creditors, giving you a fresh start, financially. 

Alternatively, you can reorganize your finances and debts if you qualify for Chapter 13 bankruptcy. In both a Chapter 7 and Chapter 13 bankruptcy, an automatic stay prevents most creditors from pursuing you for repayment of debts, but in a Chapter 13 bankruptcy, you may be able to keep your assets if you are able to complete a repayment plan. To learn more about the benefits of filing for bankruptcy and a fresh start, reach out to the offices of H. Lehman Franklin, P.C., in Georgia. Call today at 912-764-9616 or email us at info@hlfranklin.com