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3 tips to help you cope with the emotional impacts of bankruptcy

Filing bankruptcy is the means to an end. It is a way to obtain financial freedom when you have more debt than you can afford to pay. Many people focus on the monetary benefits and forget that they might have to deal with the emotional impacts of the filing.

There are several emotions that you might experience when you file. Throughout the process, your feelings can fluctuate. Being prepared to handle them can help you cope with the journey.

Can filing bankruptcy stop an asset repossession?

People who are swimming in debt might have trouble making payments on secured assets, such as a vehicle or home. It is imperative that you decide how you will handle this situation as soon as you realize you won't be able to keep up with the payments. Your first line of defense might be contacting the lender to see what you can work out. During this meeting, be sure that you don't make any payment arrangements that you can't keep.

If you aren't able to work something out with the lender, you might consider bankruptcy to try to prevent repossession. This requires that you take a hard look at your financial situation to determine what you need to do. There are two primary options in a personal bankruptcy. You can file for a Chapter 7, which is the liquidation bankruptcy and doesn't require you to make payments. You might qualify for a Chapter 13, which requires you to make regular payments to the bankruptcy trustee.

When the golden years are not so golden

As the baby boomers continue to age, an unnerving trend is beginning to emerge. Many in this demographic are approaching retirement age dead broke and without resources.

It's a myth that all baby boomers are well-heeled burghers and matrons with stock portfolios and summer homes. Many unfortunate senior citizens are stuck counting pennies and clipping coupons for the foreseeable future.

Bankruptcy doesn't mean you will lose your house

The financial circumstances people experience are often largely out of their control. No one decides to become sick with a severe and debilitating condition that keeps them from working. Similarly, no one hopes to wind up in a car accident that leaves them with injuries and major bills. There are countless scenarios that people encounter that leave them financially overextended and struggling with debt.

While you should do your best to repay any amount of money you borrow, sometimes predatory lending and unfortunate circumstances combine in a way that leaves people unable to meet their financial obligations each month. For those struggling to make ends meet, bankruptcy is the simplest solution for handling most forms of unsecured debt.

Think twice before hiding assets in a bankruptcy filing

Many debtors hold off on filing for bankruptcy because they fear that their assets will be seized and sold to pay off their creditors. It's a reasonable fear, and also true that some assets may be subject to seizure and sale.

However, it is also possible for debtors to hold onto much of their property in a bankruptcy. For instance, if you file for Chapter 13 bankruptcy, there is no asset seizure and additional time to pay off your creditors. But even when filing a clean-slate bankruptcy Chapter 7, many assets may be exempt from seizure.

How bankruptcy protects you from ongoing creditor harassment

Once you fall behind on your credit card bills, mortgage, car payments or utilities, you will start getting letters from your lenders. If you do not respond to those letters with payment in full, your creditors will start to take more aggressive actions. Typically this would involve either turning the account over to an internal collections department or, worse, selling your debt to a third party collection agency.

Once an account goes into collections, it can become a significant source of stress for the borrower. Collection agents have to adhere to laws about their behaviors, but they will push the issue as far as they can without incurring legal risk. They may call you at inconvenient times or places, such as your place of work.

Bankruptcy can put a stop to pending wage garnishment attempts

When you fall behind on your bills, the end result can be a lot of stress. Many people find it nearly impossible to catch up after even a few months of missed or late payments.

Your creditors will often do just about anything to get what they feel is owed to them, even if they have tacked on hundreds of dollars worth of fines, fees and penalties to your account. The end result can be a lot of stress over a financial situation that you no longer have control over.

Living on a shoestring budget might avert bankruptcy

Let's face it — life is full of curveballs. Many of those seem to occur in the financial sector of our lives, and sometimes we aren't as well-prepared as we should be.

If your economic situation is in free-fall, the following tips might help you avoid filing for bankruptcy:

Don’t put off bankruptcy relief if you need it

When it comes time to consider a bankruptcy, many people prolong their suffering simply because they "aren't ready" to commit to the process. The power of a bankruptcy is very strong, and may provide exactly the relief that you need, but the longer you put it off, the longer you must wait for it.

At the same time, you may actually hurt your future financial security by waiting to begin bankruptcy. Many people do not realize that bankruptcy restrictions often allow them to keep much of their property and income at the time of the bankruptcy, and may not affect a person's ability to receive income or gain property once the bankruptcy begins.

Chapter 13 bankruptcy and exempt property

If you qualify to file for debt reorganization under a Chapter 13 bankruptcy, you may enjoy a number of advantages that individuals who file for other forms of bankruptcy do not. Unlike Chapter 7, which focuses on liquidating assets to allow a debtor with little or no income to discharge his or her debts, Chapter 13 allows those who have income to repay debts at a more manageable pace, potentially discharging some portion of the debt.

One of the most attractive aspects of a Chapter 13 bankruptcy is that the procedure allows those who qualify to keep their personal property, as long as they can complete the repayment plan while abiding by its particular restrictions and timelines. If you suspect that Chapter 13 may resolve your financial difficulties, do not waste any time moving forward. The sooner you begin your own Chapter 13 procedure, the sooner you can get out of debt and back on track, all while maintaining ownership of your property.

Start By Getting Your Questions Answered

Contact us now to learn about what options are available to you in your particular financial situation. Call our law firm today at (901) 201-6012 or fill out the form to schedule a FREE CONFIDENTIAL CONSULTATION.

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Memphis, TN 38111

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