Debt doesn’t happen overnight. It builds over time, even if the rate at which it happens varies for different people. It’s difficult to decide if and when bankruptcy is an appropriate solution to debt issues. There are several considerations when it comes to timing a Chapter 7 bankruptcy filing if you want to reap the maximum benefits. You could be under circumstances that require a filing as soon as possible, or it may be more advantageous for you to wait. Read on to learn more about the issues that should impact your decision. If you’d like to schedule your free consultation with a member of the bankruptcy team at My AZ Lawyers, call 480-405-1010.
Received A Summons?
If one of your creditors files a lawsuit against you, you will receive notice through a summons. A summons gives you a date and time to appear in court, potentially presenting a defense against why you owe the amount alleged. If you don’t appear in court, your creditor will obtain a default judgment against you. Legal fees and interest can be added to the judgment balance. The creditor can also use the judgment to take further action against you.
One of your creditor’s options after obtaining a judgment against you is garnishing your wages. A creditor who has obtained a judgment against a debtor can use that judgment to request a writ of wage garnishment from the court. Your employer will also receive a notice of your wage garnishment. An employer can’t terminate you for receiving one notice of wage garnishment but can terminate you for receiving a second in a 12-month period.
For most debts, your creditors can garnish up to 25% of your paychecks. If this causes you financial hardship, you can petition the court to reduce the garnishment- however, the lowest the court can reduce it to is 15%. Some debts can result in wage garnishments at even higher rates. Parent who fails to make their child support payments could have their wages garnished up to 50%. If the parent has no other legal dependents, that maximum is increased to 60%. If the parent is more than 12 weeks behind on payments, the maximum is increased another 5%, bringing the potential maximum child support wage garnishment to a whopping 65%.
Phone Ringing Off The Hook With Creditor Calls?
When someone owes debts to several creditors, they probably won’t answer the phone when it’s a random number calling. That’s because creditors will call again, and again, and again, until their balance has been paid or the debtor files for bankruptcy. The good news is that when a debtor while bankrupt, the creditors need to stop calling. If they have questions about the debt, they can file an adversary proceeding with the bankruptcy court. Even better, the creditor calls can stop even before the bankruptcy petition is filed. Once a creditor has been informed that a debtor has retained a bankruptcy attorney, all calls regarding debts must be made to the attorney rather than the debtor.
Behind On Car Payments & Facing Repossession?
Anyone who finances a vehicle and fails to make timely payments runs the risk of having their car repossessed. A vehicle repossession can make someone’s financial situation worse in several ways. Obviously, losing one’s vehicle can be stressful, inconvenient, and embarrassing. Losing reliable transportation to school or work could jeopardize one’s education or career. A vehicle repossession will also show up on that person’s credit report, obviously as a negative mark. Depending on the balance on the loan and the vehicle’s market value, a person could even be left with significant debt after losing their vehicle to repossession. If the vehicle sells at auction for less than the loan balance (plus fees and interest), then that person will be left with a debt known as a “repossession deficiency.”
Getting Denied On Credit Applications?
If you struggle with a low credit score, you may get a bad feeling whenever any opportunity requires a credit check. This could be a credit card application, an apartment application, or even a job application in certain industries. Having your credit ran can even damage your score further. The good news is that bankruptcy might be able to turn around your credit situation, and possibly even improve your credit score.
Received A Notice Of Foreclosure?
Just like a financed vehicle, a lender will repossess a financed home when a mortgage borrower falls behind on payments. However, the foreclosure process is a bit stricter than the vehicle repossession process. Most auto loans allow the lender to repossess with little to no notice after just one missed payment, but a mortgage lender must provide sufficient notice to foreclose on a home. The home will be sold at auction on a set date. Filing bankruptcy before the home is sold at auction stall the foreclosure or stops it permanently.
Pay Too Much Monthly In Interest & Late Fees?
Financial distress doesn’t always mean lawsuits and other strict collection actions by creditors. Sometimes it can look like late fees, overdraft fees, interest payments, etc. These expenses can seem small when viewed individually but add up to quite a significant sum per month. Paying these expenses can also make it harder to pay down principal balances and get yourself out of debt. It’s important to understand how your debts are categorized to know how they will be affected by a bankruptcy filing. Call 480-405-1010 for your free consultation today.
Affordable Arizona Bankruptcy Lawyers
Filing bankruptcy is no simple task. There are several restrictions, limits, deadlines, and other rules you must follow at the risk of your debts not being discharged, your case being dismissed, or worse. You can avoid these kinds of pitfalls by retaining a quality bankruptcy attorney. Don’t let the potential cost of bankruptcy representation intimidate you from at least seeking a bankruptcy consultation. For your free consultation with an experienced member of Chapter Bankruptcy Lawyers firm, contact us through our online form or call us at 480-405-1010 today.