Bankruptcy is a serious step and not something to be taken lightly. It's also not a solution that can be implemented time and again. There are stringent waiting periods between filing bankruptcy chapters, so you must make sure that the time is right and that you don't have other options available to you. Just being a little behind on your bills is not a reason to jump to this drastic step, but there are also people that are perfect candidates for bankruptcy debt relief that don't realize they should be considering this serious step.
If you're not sure if your debts are dire enough for you to file bankruptcy to get a clean slate, here are four sure signs that you are in over your head and can benefit from either Chapter 7 or Chapter 13:
#1 Most of Your Debts are Unsecured
Nearly all unsecured debts are discharged in Chapter 7 bankruptcy and often, in Chapter 13, they can be drastically lessened or completely forgiven. If you have maxed out credit cards, medical bills and other similar debts, you may be a good candidate for bankruptcy. In Chapter 13, you'll make payments to a Trustee who then distributes it first to your secured creditors and, if there is any left, to your unsecured creditors. After your three to five year repayment plan, any remaining balances on medical bills and credit cards are wiped out.
#2 Your Wages Have Been Garnished (Or Threatened)
Many creditors will not take it lightly if you fail to pay them. They start with phone calls and threatening letters, but may soon move on to pursuing a garnishment of your wages. In North Carolina, wages may only be garnished for student loans, alimony, child support and taxes. However, if you did live in another state and a creditor is able to get a garnishment order issued in another state, your North Carolina employer can withhold it. The threat of garnishment is enough to let you know that your debt situation is serious and you may need to consider bankruptcy to regain your financial footing.
#3 You're Being Hounded by Debt Collectors
If your home phone is ringing off the hook with calls from creditors and you've got angry collections agents calling you on the job, you need a get-out-of-debt solution. Collection calls can stress you out, make you scared to answer your phone and cause you to worry you'll lose your job. Although debt collectors are legally not allowed to tell anyone else about your debt, they may not stick to the rules or tell whoever answers the phone they are calling from a law office or collections firm. The only way to put an end to this is to pay your debts or file bankruptcy. As soon as you file, legally they have to stop all contact.
#4 Have Lawsuits Filed Against You
Since North Carolina generally doesn't allow wage garnishments, creditors frustrated by your failure to pay them may pursue a lawsuit instead. Essentially, they sue you in court for non-payment of the debt under the contract or agreement you signed. If you don't show up, or show up and have no defense, they can get a judgment against you. With a judgment in hand, they can then garnish your bank account or try to seize your assets. If you've received notices that you're being sued or threats of a lawsuit, filing bankruptcy should shut all of this down.
Every North Carolina consumer's debt situation is unique. Contact the law offices of John T Orcutt today to schedule a free consultation at one of our convenient locations to find out if you are a candidate for bankruptcy and how it can help you get a financial fresh start.