Thousands of U.S. citizens struggle to make debt payments each month, and with the added impact of coronavirus shutdowns, many more will continue to lose financial stability. If you are among those finding it difficult to keep your budget balanced, you may want to consider taking positive action for debt relief. One of the most effective ways to resolve the majority of common debts in the United States is through the process of bankruptcy. While some creditors can force debtors into involuntary bankruptcy, depending on the situation, most cases are voluntarily filed under whatever chapter best fits the circumstances. At Behm Law Group Ltd., we provide guidance and support to help our clients file a successful bankruptcy case and receive much needed debt relief in Waseca, MN, and the surrounding communities.
Filing for bankruptcy may seem like a drastic action, but it is actually one of the most common ways people in severe debt can resolve those financial struggles and find long-term financial stability. For individuals, two options are typically available for bankruptcy processes.
First, there is the option to file for Chapter 7 liquidation bankruptcy. This process works to discharge debts in exchange for the liquidation of non-exempt assets. This type of bankruptcy is most suitable for individuals with low income and high dischargeable debts such as credit card debts and medical bills. In the majority of cases, people don’t lose assets and all that they lose are their debts.
Second, filers can choose to use Chapter 13 to restructure their debts into a manageable repayment plan where there are no late fees, no penalties and no interest. This process involves the discharge of unsecured debts, the reorganization of secured debts such as motor vehicle loans and mortgage delinquencies, and the payment of tax debts, child support/alimony debts and other priority unsecured debts on more generous terms. The final results of this process depend on the filer’s own situation and the income/debts involved.
For those who may not be able to file for bankruptcy right away but still cannot pay certain debts, they can sometimes protect themselves from lawsuits and other collection activities if they are “judgment proof”. Even with debt, you can live in a way that makes it harder for creditors to sue you for not paying debts. To be judgment proof, you generally need to receive income from sources that are not subject to garnishment or attachment, such as Social Security income, unemployment income, child support income and state or county welfare income/benefits and other such income. If you can show that you have a very low income or are unemployed, have minimal assets in the form of money in a bank account or real estate, and have your income sources exempt from seizure (e.g., unemployment benefits), then you are generally “judgment proof” and it will be more difficult, though not impossible, for creditors to initiate and maintain collection activities against you.
Even if you are presently judgment proof, your financial circumstances could improve or you could inherit property unexpectedly. In other words, your circumstances could change quickly and your creditors would then be in a better position to pursue collection activities against you. You must be aware that creditors are extremely vigilant and doggedly persistent. They typically will review and investigate your economic/employment/financial situation at least once a month for any changes.
If you believe you are judgment proof, but want to learn more about what that term means, or if you want to start the process of filing for bankruptcy, Behm Law Group Ltd. can help. Contact us at (507) 387-7200 or stephen@mankatobankruptcy.com for more information about debt relief in Waseca, MN.
