With a large number of Americans still looking for work, we can expect to see the numbers of those filing for bankruptcy to continue to rise over the next couple years. The hardest part of a bankruptcy filing is the planning. Usually, most Americans use a bankruptcy filing as a last resort for overwhelming debt. Most people that wait till the last minute to file for personal bankruptcy don't have any time to do any kind of planning. It would be much better when people get into financial trouble that they would take the time to consult a bankruptcy lawyer about this situation. In many cases, there might be other alternatives and filing bankruptcy might not be in the cards at this time. Having the knowledge of what to do and even better what not to do prior to filing bankruptcy is well worth the time spent on a consultation. Before deciding to sign up for a payment plan, refinance your house or even worse, borrow money from friends and relatives one should consult a bankruptcy lawyer to avoid making a mistake that has severe consequences.
When people don't plan for filing bankruptcy, they don't realize the landmines they might be stepping on that will blow up during the bankruptcy filing. They are just trying to survive by whatever means. With changes to the bankruptcy code that went into effect back in 2005, a person has to qualify to file Chapter 7 bankruptcy. To pass the means test the person filing for bankruptcy will have to show an income below the median income for their state. Many people in financial trouble run to their pension and borrow money prior to filing bankruptcy, not realizing that this becomes income according to the bankruptcy code. Now, the person who might be unemployed at the time, is now showing a large amount of income in a short period of time and no longer qualifies to file Chapter 7 bankruptcy. This could've been easily resolved by speaking with a bankruptcy lawyer prior to making this faux pas. There is a way around it as the bankruptcy lawyer will just have the debtor delay the filing. They will have to wait a period of time for this sum of money to drop off the radar so their income is low enough to file for bankruptcy. The problem is, when someone stops paying their bills, they are a target by their creditors to file lawsuits before they have a chance to file for personal bankruptcy. If the creditor can get the debtor into court, they can get a judgment against the debtor and begin garnishing their wages. This just creates another roadblock for the bankruptcy lawyer that can be resolved after the bankruptcy is filed with the court.
In a perfect world, the US should teach young adults about financial planning and using a personal bankruptcy filing to give them a basic education on the process. This would give young people an idea of how the bankruptcy process works if they ever ran into financial difficulties. One thing is for sure, if school taught the benefits of filing bankruptcy, the credit industry would spend millions on lobbyists to make it stop.
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