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Bankruptcy may not be for everyone. There are risks involved such as losing your money or property, bankruptcy stays on your credit report for up to ten years for chapter 7 or seven years for chapter 13, you will have to rehabilitate your credit score, you may not be able to buy certain property for a number of years, and certain creditors may remain unaffected such as student loans and recent tax debt. What else can you do if creditors come calling for repayment of your debts? There are a few options.

Try Paying Off Your Debt Over Time

Even though you may be struggling, you can always continue to pay on your debt as best as you can. Bankruptcy should always be a last resort option to clear away unpayable debt. For that reason, sometimes you can find solutions by tackling your debt by repaying debt over time. If you miss a few payments, your credit score might take a hit, but it some cases it won’t be as hard as a bankruptcy filing. Try paying off smaller debts first while keeping just the minimum payments on the larger ones. Each time you pay off a smaller debt, you get a sense of accomplishment and paying off a debt frees up more money to go towards the next largest one. Keep that going as long as you can. Eventually you might be able to pay it all off, but it will take time.

Try a Debt Counseling or Consolidation Company

These companies are notorious for promising everything from total debt relief to paying off all debt at a reduced amount over a shorter period. Be careful. Some of these agencies will end up taking more of your money than the debt they pay off. Additionally, you have to be on top of them to know which debts they are paying and which ones they are not. Many times, they will tell you that you don’t need to make any more payments towards credit cards, but this may be a mistake. Creditors will not stop attempting to collect.

Collection efforts could be phone calls to your cell or even your employer, letters to your home, and eventually, lawsuits, judgments, and garnishments. Credit consolidation companies are powerless to stop creditors from taking legal action against you. Lastly, make sure you can get a refund in case you decide to file bankruptcy so you can get some of your money back.

Are You Judgment Proof?

Some people really have no assets. If you don’t own your home, car, or have a large sum of money in the bank, there may be no money or assets a creditor can get from you. In most cases, creditors will eventually file a lawsuit. Once the lawsuit is filed, they will get a judgment if the debt was a legitimate debt that you owe. Once the creditor has a judgment, they can garnish your wages or levy your bank account. There are some forms of income that are protected such as social security or Veterans’ disability among others. If you have no income or are on unemployment, or don’t keep money in the bank, you may be able to avoid creditors for a while.

Creditors can only collect from these certain assets. If they can’t get to them or you don’t have anything, the creditors have few options. People cannot be put in jail for not paying their debts with the exception of child support, or tax debt, if you have purposefully been avoiding the governmental authorities. Most often, Senior Citizens are judgment proof since they are retired, on a fixed income, and only receiving social security benefits as income.

So How Do I Know When It’s Time to File Bankruptcy?

As previously stated, bankruptcy should always be a last resort option. You know it’s your last resort when looking at your current income compared to the amount of your debt and if you see that paying off the debt seems overwhelming, then it may be time to consult with a bankruptcy lawyer. Secondly, if you are facing a lawsuit, judgment, garnishment or bank levy, bankruptcy is really the only way to put a stop to these legal actions against you.

Bankruptcy offers you an Automatic Stay, which stops any further legal action against you immediately upon filing your bankruptcy. Last, if the calls and creditor harassment has just gotten to the point where the stress and debt has been getting to you, then you should look at filing bankruptcy. You should not have to live in a world where you can no longer answer your phone, or your voicemail box is full because you are tired of creditor calls.

If you are constantly blocking calls from creditors, receiving threatening letters in the mail every day, or facing a judgment, garnishment, or bank levy, call me today at 623-777-4760 or visit my website at www.gaudiosilaw.com. We can schedule a free consultation for you, and we have payment plans to help you get back on your financial feet.