When it comes to debt relief, not all solutions are created equal. Some debt relief options, may not be effective for debt resolution or could put you at risk of further debt collection. While the bankruptcy process can be a tricky process when it comes to debt relief, much of the complications are the result of jointly owned debts and assets.
Jointly held debts are debts in which more than one person is listed on the account as the financially responsible party. These are common among couples and some dependents. Some of the most common joint owned debts are mortgages, car loans and some lines of credit. While jointly owned debts are not inherently bad, problems can arise when one member of the party seeks bankruptcy protection. If one member of a couple files for divorce, jointly held debts can become the sole liability of the non-filing member in the eyes of creditors. When this happens, the transfer of liability can land exclusively on the non-filing partner, leaving them subject to collection and garnishments. Therefore, it is highly recommended for anyone considering filing for bankruptcy that is a member of a legal partnership, consult with a Sacramento bankruptcy lawyer for proper guidance.
Similarly, problems can arise in a bankruptcy filing when there are jointly held assets by a couple. Creditors can still proceed with actions such as a foreclosure, a repossession, or when liquidating assets. If a mortgage loan is listed in the name of both parties, the property may still be legally eligible to become part of the bankruptcy estate and used to satisfy debt obligations. Assets that are shared with a spouse, family member, friend or investor could all be at risk under the filing of one individual. Further, California bankruptcy exemption laws might not be able to protect the true value of the home. Therefore, filing for Chapter 13 may be a better solution to avoid problems with jointly held debt liability or assets.
One of the reasons people fail to secure proper debt relief solutions is due to fear of losing their property or assets. Much of this fear stems from myths about bankruptcy and a lack of understanding how the bankruptcy process works. Unfortunately, this often leads people to sit by and not take action; ultimately putting them at greater risk of the negative outcomes of debt. In many cases, filing for bankruptcy could offer greater protection of your assets and property than doing nothing to resolve your debts.
Keep Your Property
There are two main types of loans: secured and unsecured. In a secured loan, such as a car or mortgage, the property items are used as collateral on the loan. Therefore, if the borrower defaults on a secured loan, the lender has the right to seize or repossess this property.
When you file for Chapter 13 bankruptcy, it provides protection from creditors seizing the property. The reason is that a Chapter 13 case includes a repayment plan designed to roll your missed payments into one monthly payment. These payments go towards satisfying the portion of your debt that you will repay in your repayment plan divided among creditors. As long as you keep up your Chapter 13 payments as outlined in the plan, creditors cannot touch your property.
If you are facing repossession, foreclosure, or are concerned about your assets being liquidated in a Chapter 7 bankruptcy; contact a Sacramento bankruptcy lawyer to review your financial profile and guide you in the best path to debt relief for you.
When you successfully resolve and complete a bankruptcy, some of your debts will be labeled as "discharged". This means that your debts are no longer enforceable for collections by the creditor. This is the ultimate goal of filing for bankruptcy and the desired outcome by anyone seeking its protection.
The end result of a successful case is a debt discharge can vary depending on the type of bankruptcy you file; Chapter 7 or Chapter 13. How the debts are managed in either of these types of bankruptcy is important to consider before you seek debt relief through bankruptcy.
When you file a Chapter 7 case, the court will evaluate your eligibility under the means test, which includes information about your assets, income and debts. The Chapter 7 means test evaluates your income and asset level to determine you have the financial ability to repay some or all of your owed debts. Debt repayment may be done through monthly payments of a calculated portion of your disposable income or through the liquidation of some nonexempt assets. It is important to note that the court will not require you to pay an amount, or liquidate assets, that would cause you further financial burden.
When you file a Chapter 13 case, the court will evaluate your income to debt levels to determine an affordable repayment plan. A Chapter 13 plan allows you to spread out your payments over the course of three to five years. An important difference to note when seeking debt relief is that repaying debts under a Chapter 13 plan also provides more protection for even nonexempt assets, like luxury items and secured debt collateral.
In either a Chapter 7 or a Chapter 13 case, it is important to note that there are some debts that are not eligible for a discharge and will require repayment. These are called "priority debts", and are considered required for repayment. Common examples of these debts not eligible for a discharge are alimony, child support, debts accumulated fraudulently and criminal restitution payments. Further, some tax debts and student loan debts may also not be eligible for discharge in bankruptcy.
If you are considering bankruptcy, speak to a Sacramento bankruptcy attorney about your debts to ensure you obtain the best outcome in your case filing.
The majority of Americans have experienced some financial challenges this year. Many hardworking people have lost their jobs, have had to cash out retirement and asset funds to make ends meet, or had to seek government assistance. Many more have simply had to rely on credit cards and other risky financial habits to get by. Whether you have experienced severe financial distress, or are simply looking to start the New Year off on a path to financial freedom; there are some quick and easy ways to improve your financial outlook for 2021.
The first step towards improving your financial situation is to analyze and assess where you currently are in your financial goals. Begin by examining the monthly, or weekly, costs for essential expenses such as housing, utilities, food, clothing, medical care, and debt payments. Next review the expenses for non-essential expenses. Compare the percentage of your income spent on essential versus non-essential expenses. Further, calculate the overall percentage of income-to-expenses.
Once you have taken a deeper look into the details of your financial situation, you need to develop a plan. Your plan should consist of a few key components, starting with a savings/emergency fund. Yes, you should still be saving for emergencies even when money is tight. In addition to your emergency fund, your plan should also focus on eliminating unnecessary expenses from your monthly spending budget. This will help lower your income-to-expense ratio. Finally, outline a strict plan for your debt payments. If you cannot afford to pay more than the minimum payment, look for ways to maximize your monthly payments by transferring the balance to a zero interest card or request a lower interest rate from your current company.
Many times, people fail at financial recovery because they do not put their plan into practice. Like a New Year’s resolution for any goal; financial health should take the same priority and discipline as other areas of health in your life. Be sure to take the plan you have developed and put it into action each and every day. Build yourself small rewards for your discipline in getting back on solid financial footing, this keeps you motivated to continue your consistent efforts.
If you are experiencing trouble with your finances, are worried about your debt payments, or are already being harassed by creditors; contact an office of compassionate Sacramento bankruptcy lawyers today at 916-459-2364.
From data released from the Survey of Consumer Finances conducted by the U.S. Federal Reserve, the average amount of debt for most families is around $5,700, with 41% of households carrying some form of debt. The average amount of credit card debt for households for those with revolving balances is around $9,300. Even more consistent in this pattern is the some $10,000 in debt carried by those with a household net worth of zero or negative.
It is of no surprise that individuals with the least amount of assets or liquid cash also carry the most debt. While this correlation may not come as a surprise, the fact is that only a fraction of those people will actively work to resolve their debts. Further, an even smaller percentage of those will successfully eliminate their debts and regain financial freedom.
Cracking Credit Card Debt
One tool that can be beneficial for anyone facing serious debt problems is to file for bankruptcy. One of the biggest advantages bankruptcy can provide is protection from creditors and collections. Many people seek bankruptcy relief to stop harassing debt collection calls, halt eviction or repossessions, stop wage garnishments, and prevent some lawsuits.
Further, a bankruptcy can eliminate credit card debt easily. In a Chapter 7 bankruptcy, debtors may be able to have their credit card debts wiped out in a matter of months. However, not everyone is eligible for a Chapter 7 bankruptcy; in which, a Chapter 13 bankruptcy may provide for credit card debt relief through a series of affordable payments to the court.
If you are experiencing problems paying your debts or are crushed by expensive credit card payments, contact our Sacramento bankruptcy attorney office today at 916-459-2364.