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When Should I File for Bankruptcy?

While each individual’s financial situation is unique, there are valid reasons that cause one to consider filing bankruptcy. In many of these cases, this is the wisest course of action to take. This is not to say that bankruptcy is a decision that should be made lightly. A person considering bankruptcy needs to understand there are consequences to utilizing this legal strategy. However, there are also benefits to filing if you find yourself in one of the following situations.

When should you file?

  1. When you find it’s a struggle or impossible month after month to pay your bills on time. Missed payments can snowball, resulting in late fees, higher interest rates, and service/account suspension or cancellation.
  2. When you find yourself behind on mortgage payments, are considering a short sale, or are facing foreclosure.
  3. When you are spending more than you are making. If you find yourself having to use credit cards or taking out loans to pay off credit cards and other expenses, you may wish to consider filing for bankruptcy.
  4. When you are receiving calls from credit collection agencies. Prior to your information being sent to a collection agency, the creditor will often contact you directly and, given today’s economy, the creditor may wish to offer you alternative payment options. However, once the collection agencies begin calling, this may be an indication that bankruptcy is the wisest option for you.

These are just a few of the reasons why people make the decision to file for bankruptcy. If any of these apply to you, and you have questions about whether filing bankruptcy is right for you, Behm Law Group in Southern MN would be pleased to answer any of your questions at no charge.

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Know Your Rights: Stop Creditor Calls

Declaring bankruptcy can be a humiliating and distressing experience for people.  People who have made the decision to file for bankruptcy do not need to suffer the added stress of creditor calls.

Creditors can be relentless in calling individuals who have fallen behind on payments.  You may receive multiple calls at your home and work or elsewhere on your cell throughout the day. Can you stop these unwanted calls? Yes. The minute you retain a bankruptcy lawyer, you may refer the creditors calling you to your lawyer. In fact, it is advisable to do so right away. Not only will this will discourage creditors from contacting you, but it will reduce the considerable stress you are experiencing. Once you actually file bankruptcy you are protected by bankruptcy laws that make it illegal for creditors to continue to contact you.

Credit representatives are hired by companies to collect what is owed and they are trained to provide intimidating or potentially misleading information that may make you reconsider your choice of bankruptcy. For example, they may state that a bankruptcy could prevent you from obtaining employment in the future, or insinuate that the impact of a bankruptcy will have a negative influence on your credit score “forever.”

Credit representatives may also attempt to discourage you from declaring bankruptcy by offering you substantially lower interest rates and/or payoff amounts. While this may decrease your overall debt in the short term, it may not have a significant impact on your ability to pay off all your debts and avoid bankruptcy. In fact, sometimes these “solutions” only forestall the inevitable need to file for bankruptcy. Some individuals have agreed to such arrangements only to later find themselves in the position of declaring bankruptcy minus the money they paid out.

If you’re in a financial crisis, have weighed your options carefully, and have determined bankruptcy is the best route to salvage your financial well-being, don’t let these callers intimidate or deceive you. Bankruptcy is a tough choice but it is most often times a necessary choice that is made to preserve and protect your own best interests. It’s not necessary to allow creditor calls add to your stress.

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Pre-Bankruptcy Credit Counseling

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 made major changes to previous bankruptcy law. Among these changes, BAPCPA added the requirement that debtors receive pre-bankruptcy credit counseling from an approved credit counselor within 180 days of filing for bankruptcy. After attending the mandatory counseling, the counseling organization issues a certificate as proof that you completed the requirement.

What to expect

A pre-bankruptcy counseling session usually takes 60 to 90 minutes. The session can be held on-line, over the phone, or in person. During the pre-bankruptcy counseling session, you will receive an evaluation of your finances, learn alternatives to bankruptcy, and learn how to create a personal budget.

How much it costs

The price varies depending on the organization, where you live, and what services you receive. However, the price is usually around $50. Before the counseling starts, the organization must disclose any fees it will charge. Furthermore, the organization must provide free counseling for people who do not have the means to pay. If you cannot afford the fee, you can ask the organization for a waiver before the start of the session. After you complete the counseling, the organization is not allowed to charge an extra fee in order for you to receive the certificate.

Where to go for counseling

Your Minnesota bankruptcy attorney can provide you with a list of credit counselors. You can also get a list of approved counselors from the Department of Justice list of Approved Bankruptcy Counseling Agencies.

Calling an attorney

Pre-bankruptcy credit counseling is only one of many requirements you have to meet to successfully file for bankruptcy. This is why you need an experienced Minnesota bankruptcy lawyer to help guide you through the requirements and processes involved in declaring bankruptcy. At Behm Law Group, LTD, we will assist you through the bankruptcy process to ensure that nothing stands in the way between you and the financial relief and protection you deserve. Give Behm Law Group LTD a call, and we will help you learn if bankruptcy is the appropriate option for your current financial situation.

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Post-Filing Financial Education

In 2005, congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which made major changes to existing bankruptcy law. One of these changes included the addition of a requirement that debtors receive post-bankruptcy financial education from an approved credit counselor or counseling organization. After meeting this education requirement the attendee is issued a certificate. The attendee then submits the certificate provided by the credit counselor or organization as proof they completed the course. This certificate is different from and should not be confused with the certificate provided after attending pre-bankruptcy credit counseling.

What you will learn

Post-filing education includes topics such as managing money, using credit wisely, and building a budget. You can take the course on-line, over the phone, or in person. Don’t take this requirement to mean that the bankruptcy was somehow your fault. This practical money-management information can benefit anyone, no matter what their financial situation, and serves to help and strengthen your financial future.

Cost of the course

It usually costs $50 to $100 for the course. The price depends on the counseling organization you use and where you live. The organization has to disclose the fees before you start the course. If you cannot afford the fee, you can ask the organization for a waiver.

Where to go for counseling

The Department of Justice has a list of Approved Bankruptcy Counseling Agencies. Also, a Minnesota bankruptcy lawyer can provide you with a list of credit counselors.

Help from your attorney

There are many requirements for declaring bankruptcy. Getting pre-bankruptcy credit counseling and post-bankruptcy financial education are only two of the requirements. You need an experienced Minnesota bankruptcy attorney to assist you through the process of meeting every requirement and ensure that your bankruptcy filing is successful.  At Behm Law Group LTD, we have many years of experience helping thousands of people like you. If you’re in a desperate financial situation, give us a call. We will guide you through the bankruptcy process and help you get the relief and protection you need.