The real question is, when you get in a situation where you can’t pay your bills, when should you eliminate or consolidate.
Read Chapter 5 of Attorney Peter Francis Geraci’s “Complete Book on Bankruptcy” below or at https://www.bankruptcybookbypeterfrancisgeraci.com/
The main causes are:
1. Financing lifestyle Buying things on credit can get out of hand
2. Failure to get raises Bills go up, but salary doesn’t. That is pretty common.
3. Illness When you’re ill, you can pay your bills
4. Bad luck Accidents, floods, fires, theft
5. Job loss Getting rehired often means taking a pay cut, now days
6. Gambling Yes, it’s a major cause of filing bankruptcy
7. Family Many solid working people are paying for family members debts
The real question is, when you get in a situation where you can’t pay your bills, when should you eliminate or consolidate. The answer is:
A. Before you spend your pension. The first thing many people do to pay bills is take a 401K loan or draw down their pension. Do NOT do that, because creditors cannot touch your 401K or pension. Bankruptcy laws protect your pension and 401K. No one can touch it. File before you think of using retirement funds to pay creditors.
B. When you lose a good job. There is an income test for Chapter 7. So if you lose a 100K a year job, why pay the credit cards unless you are going back to work right away. If you’re not back to work in 4 months, you might qualify for Chapter 7. But if you wait until you go back to work, you might not qualify, because now you make more than the median income, and your only remedy is Chapter 13 debt repayment, based on your income.
C. If illness and unpaid medical bills are your problem, wait until you are better, or have insurance before using up your right to file Chapter 7. If you are working and have ongoing medical that is unpaid, often Chapter 13 is a good idea, because it keeps your Chapter 7 option open.
D. If you simply aren’t making enough money, you should take my debtor education course, get out of debt, and learn how to budget. It just may be impossible to pay your debt on the salary you are making.
E. Don’t consider bankruptcy unless you can eliminate at least $10,000 in debt. It is just dumb to file any bankruptcy because you have a lawsuit for $4000. Settle it yourself. Save your bankruptcy for a real disaster.
***If three or more of the following apply to you, you should see a bankruptcy lawyer now.
***If more than 5 of the following apply to you, you should have already seen us 3 months ago!!!
_____My debt is over $10,000 not including a car or house.
_____My payments are over 25% of my take home pay.
_____I am frequently late on my payments.
_____I pay 20% interest on my debt.
_____I buy necessary items like food or clothing on credit.
_____I frequently get cash advances.
_____I am thinking about getting a loan to pay other loans.
_____ I have a lawsuit and over $10,000 in other debt I can eliminate.
_____Collection agencies are calling me.
_____I am “robbing Peter to pay Paul.”
_____My balances are not going down even though I make payments.
_____I have been turned down for more credit.
_____Payments are more than 1 month behind on more than one bill.
_____My driver’s license is suspended because of an accident.
_____I am working but paying other debts so I can’t afford car insurance.
_____My mortgage or rent is always late, or is behind.
_____We are getting divorced and have too many bills to pay.
_____I have medical bills over $20,000 that are not insured.
_____There is a garnishment or wage assignment on my check.
_____I owe income taxes I can’t pay now.
_____My car is worth much less than I owe.
_____I have no savings.
If none of these apply to you, congratulations!! You are living the American Dream.PREVIOUSNEXT