Many Americans use credit throughout their lives. Individuals use credit to pay for homes, cars, and other major purchases, including vacations and travel expenses. When a person uses their credit, they generally understand that they will need to cover the debt at some point in the future.
However, sometimes unexpected expenses pop up, and paying off debt can become a more significant burden than you initially bargained for. While trying to work out a new arrangement with your creditors might be an option to help alleviate the financial burdens already on your shoulders, sometimes debtors are left with no choice but to file for bankruptcy.
Bradford Law Offices, PLLC represents debtors who are filing for bankruptcy in Wake Forest. If you are no longer able to pay your debts, then contact our attorneys to discuss your situation. We will help you evaluate your options and come up with a bankruptcy plan that works for you and enables you to get on solid financial footing again.
What Is Bankruptcy?
Bankruptcy was established by the federal government to help debtors who are overburdened with debt get a fresh start financially. Through the bankruptcy process, debtors can seek relief for some or all of their debts, depending on the type of debt.
Why Do People File For Bankruptcy?
Many debtors file for bankruptcy for one of the following three reasons, or some combination of the three. A large number of Americans live paycheck-to-paycheck, and an emergency or otherwise unexpected expense could cause a person to sink so far into debt that they have no choice but to pursue bankruptcy.
Some of the most common reasons why people file for bankruptcy include:
- Medical expenses – Most people do not plan for a medical emergency, and it’s impossible to predict when one will occur. If your medical condition requires a trip to an emergency room or a hospital stay, you could be facing massive costs. Trying to pay off medical debt can cripple your budget to the point that you are unable to make good on other debts.
- Lay off/drop in income – We go to work each day expecting to earn a paycheck. If the economy goes south, your company may be forced to lay you off or reduce your hours substantially. Losing your income may prevent you from being able to pay off debt.
- Divorce/termination of marriage – The expenses you may incur as a result of a loved one’s death or due to a divorce can leave you with a heavy financial burden. Even if you were able to easily pay your monthly debts before, sudden changes in your life can leave you saddled with more debt than you can handle.
You may feel guilty for even considering bankruptcy as an option. There’s a stigma that filing for bankruptcy indicates a personal failing on your part. But oftentimes, people file for bankruptcy due to unforeseen circumstances entirely beyond their control. In some cases, the only way to stay afloat and protect yourself, your family, or your business is to file for bankruptcy.
If you have questions about the bankruptcy process and whether it is the right choice for you, contact our attorneys today.
Types of Debt
There are three main types of debt:
- Secured debt – Secured debt includes debt that is backed by property. A home loan would be considered a secured debt, as would a car loan. The loan is secured by the property, which means that if you fail to pay a secured debt, the creditor can repossess the property.
- Unsecured debt – Unsecured debt is debt for which there is no collateral. Common types of unsecured debt include credit card debt and medical debt.
- Priority debt – Priority debt refers to debts that are the most urgent or critical to pay off during the bankruptcy process. Priority debts might include child support debts, spousal support, trustee fees, and more. Essentially, priority debts are debts that may cause major financial problems if you do not resolve them.
Have questions about the types of debt that filing for bankruptcy can erase? Contact our attorneys to discuss your situation today.
Common Types of Bankruptcy
There are several different types of bankruptcy, though many people are only familiar with Chapter 7 and Chapter 11. Some common types of bankruptcy include:
- Chapter 7 – Chapter 7 bankruptcy is also referred to as “straight bankruptcy” or “liquidation.” Under Chapter 7 bankruptcy, most of your debt can be erased or discharged. The bankruptcy court will assign a trustee to your case to list out your assets, which can be used to repay creditors. However, Chapter 7 also provides you with exemptions that can be used to protect most of your basic assets.
- Chapter 11 – Chapter 11 bankruptcy is the most complex type of bankruptcy. A businessperson can reorganize their business assets, affairs, and debts through Chapter 11 bankruptcy, allowing them to keep the business running while restructuring their debts. The debtor is allowed to propose the repayment plan under Chapter 11, but if the debtor does not propose a plan, then the creditors may do so.
- Chapter 13 – Chapter 13 bankruptcy is a reorganization plan created by a debtor that enables them to repay their creditors over time. Creditors can object to a debtor’s proposed Chapter 13 plan. If the creditor objects, a judge will decide whether to approve the reorganization plan.
Contact Us Today
If you are considering bankruptcy, it is essential to consult with an experienced bankruptcy attorney first. Reach out to the attorneys at Bradford Law Offices, PLLC today to discuss your case and evaluate your options. Our lawyers will help you decide if bankruptcy is right for you. If you choose to work with us, our attorneys will help guide you through the bankruptcy process while fiercely protecting your rights and acting as your advocate in court.
Contact our office at (919) 758-8879 at your earliest convenience to schedule a free consultation with one of our bankruptcy attorneys. We look forward to hearing from you.