Bankruptcy Basics

Bankruptcy Basics

Credit card companies want people to believe that bankruptcy is just for people who aren’t able to manage their finances and purposefully abuse their credit cards. They use these tactics to shame people to keep them from filing bankruptcy. The reality is that most people who file bankruptcy do so because of job loss, unexpected medical bills and other factors beyond their control. As St. Louis bankruptcy lawyers we have filed bankruptcy cases for a wide variety of people. People who file bankruptcy from all walks of life, Financial hardships burden all demographic groups.

Bankruptcy is federal law and is a mechanism that allows people to get a fresh financial start. Most debts are “discharged” in bankruptcy meaning that you no longer owe them. Some debts are not dischargeable, such as child support and student loans.

Most people who file bankruptcy typically use one of two types. Those are Chapter 7 and Chapter 13.

In Chapter 7 most people do not end up paying anything to their unsecured creditors, such as credit cards, payday loans, and medical bills. Unfortunately, not everyone qualifies for a Chapter Debtors must pass the “means test” which Congress implemented to make high income people pay back a portion of what they owe to unsecured creditors. For those who cannot file Chapter 7 for some reason Chapter 13 is an option. Chapter 13 allows people to make payments under a court approved plan based on what they can afford, rather than what they owe.

One of the most powerful parts of bankruptcy is known as the “automatic stay.” When someone files bankruptcy the “automatic stay” requires that everyone you owe money to must stop trying to collect from you. This means that all garnishments, tax levies, foreclosures, lawsuits, and phone calls must stop.

Many people believe that filing bankruptcy as a last resort, but it might just be the best solution to wipe out your debt. I have seen many people use their 401k retirement to pay creditors when bankruptcy could have eliminated the debt and allowed them to keep their retirement. Call us at Doyel Law, LLC so learn if bankruptcy is the best option for you.

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