5 Benefits of Filing for Bankruptcy

If you are in debt and are considering bankruptcy, there are five clear benefits that you can realize from filing for bankruptcy. Bankruptcy can be a great solution for several reasons. Learn more about the benefits of filing for bankruptcy to get rid of debt.

Why Do People File Bankruptcy?

According to information obtained from, the US Bankruptcy Court statistics, one of the biggest reasons that people file bankruptcy is because of medical bills. Another leading reason that people wind up filing for bankruptcy is that they lose their jobs. On average, according to the Department of Labor, people that are looking for a job spend about 11 hours a week looking for a job.

Most people do not take on debt that they have no intention of paying. There is usually an event that pushes them into bankruptcy. Unexpected situations crop up all the time and can change your financial picture quickly.

Bankruptcy Process

Bankruptcy does come with a lot of benefits, but it is a process. You will need to provide a complete list of creditors to your attorney. You will also have to attend meetings or mediation sessions to sit down with creditors. You want to be fully prepared for your mediation. Have all the documentation with you, and your payment history to ensure that your lawyer can negotiate on your behalf.

1. The Benefit of The Automatic Stay

One of the biggest benefits of filing for bankruptcy is the “automatic stay”. The automatic stay goes into effect as soon as you file for bankruptcy. The automatic stay prevents collections, phone calls, foreclosure actions, and repossessions by your creditors.

Once the bankruptcy is filed, creditors are barred from contacting you and they are barred from reclaiming their property through foreclosure or repossession. The automatic stay can stop foreclosure proceedings right in their tracks. It can also keep the repo many away who is trying to take your car.

2. Stress Relief Is a Big Benefit

If you are like most people that find themselves in debt with no way out, you will likely face a lot of calls from debt collectors. They likely call, text, call your job, send letters, and more to pressure you into making payments. You also may be dealing with a repo company looking for your car, or the threat of losing your family home. It is an extremely stressful situation.

Bankruptcy stops stress. Bankruptcy helps you to take a deep breath and get out from under suffocating debt and the fear you feel every time the phone rings. Learn more about the benefits of bankruptcy from an attorney today.

3. You Will Get a Fresh Financial Start

There are two different chapters of bankruptcy that are used to discharge consumer debt. Chapter 11 and a Chapter 7. The Chapter 11 option is often referred to as “reorganization bankruptcy”. It is a plan that helps you to pay off your debt over a specific period of time with less interest. In Chapter 11, you get to keep all of your goods. Unsecured debt is discharged, and secured debt is reorganized to help you pay it off.

In a Chapter 7 bankruptcy filing, everything but exempt assets will be sold to raise money to pay your debt. However, once you are discharged you will carry no debt. In a Chapter 11 case, the plan may take three to five years to pay off the debt.

An attorney can help you to decide which chapter is the right chapter for your situation. In both cases, once you complete the process, you will have a fresh financial start.

4. You Can Start Rebuilding Your Credit

Bankruptcy, contrary to popular belief, does not mean you will never get credit again. As a matter of fact, many creditors are out there willing to work with people that have filed for bankruptcy. You can start rebuilding your credit immediately.

5. Being Proactive About Your Finances Is Respected

When you realize you are in trouble financially, it is always best to be proactive. Filing for bankruptcy is not avoiding your debt, it is taking responsibility for your debt. You will feel better about yourself and creditors will see you in a different light. Speak to an attorney about the benefits of bankruptcy today.

What is Foreclosure and Why it Happens

Foreclosure is a legal process that happens when a borrower fails to make payments on their home loan. The lender will then take back the property and sell it in order to recover its losses. This can be a difficult process for both the homeowner and the lender. In this article, we will discuss what foreclosure is, why it happens, and how you can avoid it.

What does foreclosure exactly mean?

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by selling the property that was used as collateral for the loan. There are two types of foreclosure: judicial and non-judicial. Judicial foreclosure is when the lender must go through the court system to foreclose on the property, while non-judicial foreclosure does not require any involvement from the court. In most cases, foreclosure happens because the borrower has fallen behind on their mortgage payments. This can happen for a variety of reasons, such as job loss, illness, or divorce. You will probably need a lawyer so if you live in Florida, you can use a Florida Foreclosure Lawyer, as different areas have different laws on foreclosure. Once the borrower falls behind on their payments, they will typically have a grace period of 30-60 days to catch up. If they are unable to do so, the lender may begin the foreclosure process.

How to prevent foreclosure?

If you are struggling to make your mortgage payments, the best thing you can do is contact your lender as soon as possible. Many lenders are willing to work with borrowers who are having difficulty making their payments. They may be able to offer a repayment plan or extend the terms of your loan. If you are facing financial hardship, there are also government programs that can help you keep your home. These include the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP). To prevent foreclosure, it is important to stay current on your mortgage payments and communicate with your lender if you are having difficulty making them. With a little effort, you can avoid foreclosure and keep your home.

Is foreclosure a common occurrence?

Foreclosure rates have been on the rise in recent years, but they are still relatively low. In 2018, the foreclosure rate was 0.51%, which means that about one in every 200 homes was in some stage of foreclosure. While this may seem like a small number, it represents a significant increase from previous years. In 2017, the foreclosure rate was 0.41% and in 2016 it was 0.36%. The good news is that foreclosure rates are still well below their peak of around four percent that we saw during the housing crisis in 2008. 

Foreclosure can be a difficult and stressful process for both borrowers and lenders. However, by understanding what foreclosure is and how to prevent it, you can protect your home and your finances. If you are struggling to make your mortgage payments, be sure to contact your lender as soon as possible to discuss your options.

 

How To Use The Debt Snowball Method To Pay Off Debt

debt

Nearly all Americans have some form of debt. And millions of Americans feel trapped by the amount of debt that they currently have. If this sounds like you, you likely know first-hand how unpleasant and stressful that can be.

But for so many, getting out of debt seems impossible. When debt starts to look like an insurmountable problem, the debt snowball method might be the strategy that empowers you to tackle that mountain of debt.

Many people once suffocated by their debt have found financial freedom by using the debt snowball method. The name comes from how one goes about building a snowman. First you create a tiny snowball and roll it across the yard so that the momentum and speed turn that tiny ball into a boulder of snow large enough to build a snowman. The backbone of the debt snowball is momentum! It ignores interest rates and instead uses your psychological state to push you forward.

The Four Steps of the Debt Snowball Method

·         Step One

Use an Excel spreadsheet, piece of paper, or budgeting app to list all of your debts–except your mortgage. This includes all your credit cards, student loans, tax debt, auto title loans and medical debts. Put them in order of smallest to largest–regardless of the interest rate!

·         Step Two

After determining which debt is the smallest, make only the minimum payment every month for each of your debts except for the smallest. The smallest debt is the one you tackle head on!

·         Step Three

Pay as much money as you can on your smallest debt each and every month. If you find you have extra money at the end of the month, then use that money to pay off that particular debt. Cut down on unnecessary expenses to increase the amount of money you can put towards that smallest debt. Keep doing this until the first debt is paid off completely!

·         Step Four

After you’ve defeated that first debt, roll those payments on over to the next smallest debt and start throwing all your extra money at that one. Having one less minimum payment will enable you to pay extra every month. Additionally, the feeling of accomplishment will likely fuel your motivation to reallocate even more funds to your debt snowball! Repeat this process until each debt is paid in full, going up and up in size.

The key of the debt snowball method is behavior modification and the driving force behind it is hope. Yes, you can make it out of debt! Once you have paid off the first debt, then the second debt and so on and so forth until it’s all gone.

This does not mean the debt snowball method is an easy process, nor does it mean there won’t be lifestyle changes and sacrifices to make. But once you have made your way out of debt, you will be able to breathe easier and have a level of financial freedom that you never deemed possible.

If you’re looking for more resources on paying off your debts, consider reading these great websites

Punch Debt In The Face

Blogging Away Debt

Frugal Debt Free Life

My Debt Epiphany

Image source: Mike Lawrence.

How to Get Out of Debt

Does it seem like you are fighting a losing battle when it comes to all your debt? If you are making as much money as you can but not able to pay all of your bills let along tackle all of that debt something has to give. But if you already have given up all that you can what else can you do to manage your debt before it completely consumes your life? There may be a solution to your debt situation, one in which will finally set you free. According to a financial help article, you can become debt-free when you create a plan. First thing you will want to do is list the debts from smallest to largest. What will start to take place is what financial advisors call ‘debt snowball rolling’. By paying off the smallest amount first you can then use the minimum amount due from that card to pay off the next card. According to a money article, it is still possible to live the life you want to live while still paying off your debt. Some additional tips that you can use to help pay off your debt faster include: knowing what you owe, following the ten times ten rule (saving ten dollars at a time), spending cash instead of using credit cards, paying off your Christmas debt first, asking to have your rates reduced or transferring your debt to a lower interest card, refiling your W4 and having them withhold your federal taxes so that you can use that money now to pay off debt, and finally, when all else fails, don’t be afraid to ask for help.

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