Is Bankruptcy Right For You?
Bankruptcy may help if you have:
Financial Stress
Too Many Bills
Lost Your Job
Facing Foreclosure
Unexpected Medical Expenses
Common Reasons People File for Bankruptcy
A Divorce or a Medical Crisis Can Be the Impetus for a Bankruptcy Filing One of the top reasons are they had a change in their life such as a divorce. Divorce is a very big lifestyle change that leads to people filing bankruptcy. Another reason is that they had a significant medical situation where the medical bills spiraled out of control and they need to deal with that. Consumer Debt Can Lead to Bankruptcy because of the High Interest Rates Charged by Credit Card Companies When we have people who have a lot of consumer debt, usually that is something that creeps up on people and they get into a certain amount of debt and think they’re managing it but life always throws everybody curveballs. At some point, the interest is being charged on the debt snowballs it into something that they no longer are able to handle. Business Debt: A Business Folding Can Lead to Bankruptcy A job loss is also a major reason for bankruptcy. Also some debt is not consumer debt, it can be business debt. Sometimes you go into business and things don’t work out and then you end up with the debt associated with that business. Bankruptcy Is an Option Used by People across the Socioeconomic Spectrum A lot of people who never had to deal with bankruptcy or debt problems, and they walk around with these image in their head about bankruptcy. They believe that debt is this dark cloud, this ogre under a bridge so to speak. Why Do People Delay in Filing for Bankruptcy? Well and that actually, leads right into my next question. What would be the most common reasons that people do take so long to decide to file bankruptcy or just avoid doing it altogether? Some People Feel There Is a Social Stigma Attached to Filing for Bankruptcy I think the vast majority of times, people are leery of the social stigma or this taint associated with it which is really unfounded. They resists until they backed themselves into a corner. Bankruptcy is just another financial tool in the toolbox and large corporations use it, municipalities use it, for example, look at the recent bankruptcy filing in Detroit. Bankruptcy is a way of sorting things out, doing what can be done for the creditors and then what can’t be done. It is a resolution so that debt doesn't haunt you forever.
1)Overwhelming medical debt: In many cases filing Chapter 7 will eliminate or at least greatly reduce ones medical debt due to the illness of an individual or loved one.
2)To stop foreclosure: One can file either Chapter 7 or Chapter 13 to put the brakes on foreclosure immediately. A client will be able to reorganize their debt and catch up on missed payments related to a mortgage.
3)Being laid off: When the housing bubble burst many of those in construction, or related businesses, lost their job. Unemployment is among the most commonplace reasons people must file in court.
4)Pay off enormous debt: There are those who have growing credit debt due to paying off bills and other expenses after losing a job. A spouse or significant other could have been the one responsible for the debt, and now, the responsible party must now deal with it. Bankruptcy in this case may be the best means of settling debt.
5)Cut back or eliminate wage garnishments: For those who suffer from mounting debt, some creditors may have already started to garnish one’s pay. Filing Chapter 7 or Chapter 13 can make these payments much more comfortable to meet each month. Yet, it is critical that payments be made on time or the case’s Trustee will file a Motion to Dismiss. 6)Decrease the amount owed on student loans: Even the most responsible college graduate may find themselves out of a job and a great deal of money owed in student loans. To repay these debts in a timely manner and stop the harassing phone calls, filing Chapter 7 or Chapter 13 is a prudent move
Q: What are the differences between Chapter 7, 11 and 13 bankruptcy?
A Bankruptcy can either be a “fresh start” or it can be a reorganization. “Fresh start” bankruptcy is often used when debts far exceed the assets and income.
Chapter 7 is the “fresh start” chapter of the bankruptcy chapter. While it may be a relief to get out from under a heavy debt load, certain assets and property may have to be sold for the benefit of the creditors. Reorganization, on the other hand, does not discharge all debts, but allows for a repayment plan over time, often at steep discounts. Reorganizations are only allowed where there is sufficient and regular income to support a repayment plan.
Businesses often use Chapter 11 to reorganize and save their business, while qualifying individuals often use Chapter 13. Selecting the right bankruptcy chapter can be a complicated analysis. Consulting with a licensed bankruptcy attorney is highly recommended.
Famous People who filed bankruptcy:
Milton Snavely Hershey, 1857-1945, founder of Hershey’s chocolate, started four candy companies that failed and filed bankruptcy before starting what is now Hershey’s Foods Corporation. Mr. Hershey had only a 4th grade education, but was certain he could make a good product that the public would want to purchase. His fifth attempt was clearly successful.
Henry Ford, 1863-1947, automobile manufacturer, first two automobile manufacturing companies failed. The first company filed for bankruptcy and the second ended because of a disagreement with his business partner. In June 1903, at the age of 40, he created a third company, the Ford Motor Company with a cash investment of $28,000.00. By July of 1903 the bank balance had dwindled to $223.65, but then Ford sold its first car, and as they say the rest is history. MC Hammer (Stanley Burrell) 1962- , musician and entertainer, filed for Chapter 11 bankruptcy in 1996 because he did not have the income to support his lavish lifestyle and defend all the lawsuits that were filed against him.
Walt Disney, 1901-1966, cartoon creator, filed for bankruptcy in 1920 after his main client of his new business filed bankruptcy. Disney said he could no longer pay his employees or the rent and had no choice but to file bankruptcy himself. In 1923 her formed a new company with a loan from his parents and his brother. In 1928 her created “Mickey Mouse” and the rest is history. Donald Trump, 1946-, businessman, filed a Chapter 11 bankruptcy case for his casino empire in 2004 to reorganize his business after negotiations with his creditors failed. This was the second bankruptcy case for his casino business, in 1992 he had filed Chapter 11 bankruptcy for his casino business.
Mike Tyson, 1965-, professional fighter, filed a Chapter 11 case in August of 2003 because he was not able to pay all his bills.
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Is Bankruptcy Right For You?
Bankruptcy may help if you have:
Common Reasons People File for Bankruptcy
A Divorce or a Medical Crisis Can Be the Impetus for a Bankruptcy Filing
One of the top reasons are they had a change in their life such as a divorce. Divorce is a very big lifestyle change that leads to people filing bankruptcy. Another reason is that they had a significant medical situation where the medical bills spiraled out of control and they need to deal with that.
Consumer Debt Can Lead to Bankruptcy because of the High Interest Rates Charged by Credit Card Companies
When we have people who have a lot of consumer debt, usually that is something that creeps up on people and they get into a certain amount of debt and think they’re managing it but life always throws everybody curveballs. At some point, the interest is being charged on the debt snowballs it into something that they no longer are able to handle.
Business Debt: A Business Folding Can Lead to Bankruptcy
A job loss is also a major reason for bankruptcy. Also some debt is not consumer debt, it can be business debt. Sometimes you go into business and things don’t work out and then you end up with the debt associated with that business.
Bankruptcy Is an Option Used by People across the Socioeconomic Spectrum
A lot of people who never had to deal with bankruptcy or debt problems, and they walk around with these image in their head about bankruptcy. They believe that debt is this dark cloud, this ogre under a bridge so to speak.
Why Do People Delay in Filing for Bankruptcy?
Well and that actually, leads right into my next question. What would be the most common reasons that people do take so long to decide to file bankruptcy or just avoid doing it altogether?
Some People Feel There Is a Social Stigma Attached to Filing for Bankruptcy
I think the vast majority of times, people are leery of the social stigma or this taint associated with it which is really unfounded. They resists until they backed themselves into a corner. Bankruptcy is just another financial tool in the toolbox and large corporations use it, municipalities use it, for example, look at the recent bankruptcy filing in Detroit.
Bankruptcy is a way of sorting things out, doing what can be done for the creditors and then what can’t be done. It is a resolution so that debt doesn't haunt you forever.
1) Overwhelming medical debt: In many cases filing Chapter 7 will eliminate or at least greatly reduce ones medical debt due to the illness of an individual or loved one.
2) To stop foreclosure: One can file either Chapter 7 or Chapter 13 to put the brakes on foreclosure immediately. A client will be able to reorganize their debt and catch up on missed payments related to a mortgage.
3) Being laid off: When the housing bubble burst many of those in construction, or related businesses, lost their job. Unemployment is among the most commonplace reasons people must file in court.
4) Pay off enormous debt: There are those who have growing credit debt due to paying off bills and other expenses after losing a job. A spouse or significant other could have been the one responsible for the debt, and now, the responsible party must now deal with it. Bankruptcy in this case may be the best means of settling debt.
5) Cut back or eliminate wage garnishments: For those who suffer from mounting debt, some creditors may have already started to garnish one’s pay. Filing Chapter 7 or Chapter 13 can make these payments much more comfortable to meet each month. Yet, it is critical that payments be made on time or the case’s Trustee will file a Motion to Dismiss.
6) Decrease the amount owed on student loans: Even the most responsible college graduate may find themselves out of a job and a great deal of money owed in student loans. To repay these debts in a timely manner and stop the harassing phone calls, filing Chapter 7 or Chapter 13 is a prudent move
Q: What are the differences between Chapter 7, 11 and 13 bankruptcy?
Famous People who filed bankruptcy:
Milton Snavely Hershey, 1857-1945, founder of Hershey’s chocolate, started four candy companies that failed and filed bankruptcy before starting what is now Hershey’s Foods Corporation. Mr. Hershey had only a 4th grade education, but was certain he could make a good product that the public would want to purchase. His fifth attempt was clearly successful.
Henry Ford, 1863-1947, automobile manufacturer, first two automobile manufacturing companies failed. The first company filed for bankruptcy and the second ended because of a disagreement with his business partner. In June 1903, at the age of 40, he created a third company, the Ford Motor Company with a cash investment of $28,000.00. By July of 1903 the bank balance had dwindled to $223.65, but then Ford sold its first car, and as they say the rest is history.
MC Hammer (Stanley Burrell) 1962- , musician and entertainer, filed for Chapter 11 bankruptcy in 1996 because he did not have the income to support his lavish lifestyle and defend all the lawsuits that were filed against him.
Walt Disney, 1901-1966, cartoon creator, filed for bankruptcy in 1920 after his main client of his new business filed bankruptcy. Disney said he could no longer pay his employees or the rent and had no choice but to file bankruptcy himself. In 1923 her formed a new company with a loan from his parents and his brother. In 1928 her created “Mickey Mouse” and the rest is history.
Donald Trump, 1946-, businessman, filed a Chapter 11 bankruptcy case for his casino empire in 2004 to reorganize his business after negotiations with his creditors failed. This was the second bankruptcy case for his casino business, in 1992 he had filed Chapter 11 bankruptcy for his casino business.
Mike Tyson, 1965-, professional fighter, filed a Chapter 11 case in August of 2003 because he was not able to pay all his bills.