[COLUMN] Stuck in debt during the pandemic? Here’s how bankruptcy can help

MOST debt problems don’t go away and solve themselves. They are there when you go to bed at night, and they’re still there when you get up in the morning. They can cause a lot of ulcers, sleepless nights, stress and even physical sickness.

As a bankruptcy attorney for the last 22 years, I have seen the devastating effects of serious debt problems on people’s personal lives, their businesses, their families and their marriages. What I have also seen is that a lot of these effects could have been avoided with proper planning.

Facing serious debt problems often causes severe anxiety and fear about the future. What will happen to me and my family if I get sued by creditors? Can they garnish my wages or freeze my bank accounts? Will I have enough to buy food, pay my rent or mortgage, and keep my head above water?

The worst thing that you can do when you are in this situation is to pretend that everything is OK until one day your situation becomes a financial emergency. You have probably heard a lot of negative things about bankruptcy. Maybe you have heard from others that you will never be able to buy anything on credit again. But what if I told you that on average, people who file bankruptcy can rebuild their credit in as little as 3-4 years? That’s right. Although it can be reported on your credit for 7-10 years, the effects of bankruptcy rarely last that long unless you allow it to happen. Bankruptcy is a beginning, it’s not the end of the world.

After bankruptcy, there are positive steps you can take to rebuild your credit. Most people who file bankruptcy have a tarnished credit rating anyway due to late payments, collection accounts, lawsuits, etc. on their credit report and as long as they remain delinquent, creditors continue to report them to the credit bureaus month after month.

Filing bankruptcy stops the reporting of negative information. While payment history accounts for 35% of your credit score, 30% accounts for how much total debt you owe. If bankruptcy wipes out most, if not all your debts, your debt to income ratio improves over time.

Filing for bankruptcy protection automatically stops all creditor actions such as harassing phone calls, collection letters, lawsuits, wage garnishments, foreclosure and repossession.

Generally, there are 2 types of bankruptcy for individuals. You can either wipe out debts you can no longer pay (Chapter 7) or you may consolidate all your debts into one low monthly payment and pay your creditors based only based what you can afford (Chapter 13). Which chapter is right for you will depend on your income, expenses, assets, and your objectives in filing, among other things.

If the COVID pandemic has resulted in loss of income which has made it difficult for you to keep up with all your bills, you’re not alone. The first thing that you need to do is to protect yourself and your family before anything else. If bankruptcy has become necessary for you to survive financially during this difficult time, there is no shame in doing what you need to do to ensure your family’s financial safety.

Bankruptcy relief can be your first step in rebuilding your finances, your credit and your life. Remember that your past doesn’t equal your future. You have the power to change your life by taking action now. If you have not read my book, “What You Need to Know Before Filing Bankruptcy”, you can download it free of charge at www.beforefilingbk.com.

For a free evaluation of your case, please call our office at Toll-Free 1-866-477-7772 to schedule a free consultation.

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NOTE: Due to the current lockdown order caused by COVID-19, I am offering free consultations BY PHONE to anyone who needs help in dealing with their debt problems. .

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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.

1 Comment
  1. It would be nice to detail the benefit of bk filing if you’re married and only one of the married folks filed and the other didn’t. True however both parties are required to submit financial disclosures per earnings and expenses, but it doesn’t disallow the filer from being an authorized user of the nonfiling spouses’ credit card. Also if the filer owns a vehicle and is gainfully employed, and the car needs repairs: proven documents from a legitimate auto repair shop just needs to be provided and funds submitted to the trustee are oftentimes reverted back to the filer of the bk so that the repairs are made.The logic here is that in order for a person to comply with the bk edict, that person needs to work and transportation is paramount. The issue of taxes and filing. It’s nothing wrong in owing the IRS at the end of the year. The monies withheld from your wages that goes to the trustee is now prioritized and must be paid to the IRS. Bottom line if your bk is totally about unsecured debt like credit cards, relax, those enormous interest rates attached to the cards are the risk card companies take.

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