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Have You Recently Asked Yourself: Is Bankruptcy Right for Me?

For many people, declaring bankruptcy is not only a financial decision; but a personal one. Therefore, no one can really advise you if it’s right for you. During the early part of the last century many people lived and worked in the same small communities. These small communities were considerably more dependent for their financial well-being on their own citizenry and the citizenry were more dependent on each other. Hence, the decision to declare bankruptcy back then was very cautiously scrutinized because of the obvious consequences to the community and its citizenry. The citizenry knew the grocer & his family personally, they knew the owner of the 5 & 10 cent store and his family personally and they knew the local haberdasher and furniture store owner and their families personally as well.

However, for more than the last decade and due to rising costs, imports from foreign countries, jobs continuing to be transferred overseas by large and mostly apathetic international conglomerates that do not have the slightest concern about US’ economy; much of an individual’s thoughtfulness and well-being for their local community has essentially eroded into chiefly one of personal financial survival.

Also, other factors such as local, small boutique-type community based stores and shops continue to decline and are replaced with the internet, big companies, big corporations and faceless enterprises in which most times you do not even know what company owns what company. Similarly the stigma of filing for bankruptcy today has dramatically lessened and the Federal Government has even carved out a place for those who need a fresh start through the filing of a bankruptcy.

In light of the preceding, read on and consider the following:

1: Can you file for bankruptcy?
If you have enough money to pay your creditors, you may be ineligible to file for bankruptcy.

Question – How would the bankruptcy courts know if you are qualified to file for bankruptcy?
Answer -You will be required to complete certain paperwork, show recent tax filings and pass the “means test” created recently within the Bankruptcy Reform Laws. If you make less than the median income established in California, you may qualify. On the other hand, if your income exceeds that figure, and you have enough left over after paying your necessary monthly expenses to cover most of your debts, you might not be able file. *Always check with a bankruptcy attorney to advise you.

2: Your immediate future is bleak and you do not anticipate it getting better without filing bankruptcy.
Question – But what if you know your hardship is temporary? What if you foresee better cash flow in the next couple of months or 6 or even 8 months from now?
Answer – You may want to wait it out. When your financial circumstances improve, you can pay down more of your debts. But then again quite candidly, only you know if you can endure the pressure of collections letters, services being reduced/cut-off, debt collectors calling and creditor lawsuits.

3: Ok, but what if there is a no light at the end of the tunnel and most debts are unsecured?
Question – Will all of your debts and liabilities go away in bankruptcy?
Answer – Bankruptcy discharges most unsecured debts such as credit and charge card balances, medical bills, collection accounts etc. *Always check with a bankruptcy attorney to advise you.

Other debts like student loans, certain tax debt, certain legal bills and child support arrearage will not go away even though they are unsecured. In addition, liens on secured debt like a mortgage or a car loan may remain your obligation to pay. So look at your liabilities: If the bulk is dischargeable, you may wish to file a chapter 7 bankruptcy. [There is also a chapter 13 Bankruptcy, but that is for another day]. *Always check with a bankruptcy attorney to advise you.

4: Be sure you thoroughly understand and accept the downside of bankruptcy and the conditions that must be met by you in order to be successful in your bankruptcy filing.
Question – What exactly do you mean the downside and the conditions of bankruptcy?
Answer – For example, your credit rating score will drop and the bankruptcy filing will be on your credit report for a very long time. Also, you will be required to take a Pre-Bankruptcy Credit Counseling Course after you file your petition for bankruptcy. The course is inexpensive and takes usually about 60 to 90 minutes to complete. There is also an inexpensive Post-Bankruptcy Debtor Education Course. The course is usually a little more than 2 hours and must be completed no later than the 45th day after the creditor’s 341 meeting. Both courses can be taken on-line with a computer or by telephone. Joint bankruptcy filers can take the courses together.

Please note the information provided above and herein is general in nature and not to be relied upon for your specific legal needs. *You should always contact an attorney to answer your precise questions. For more information about bankruptcy or other legal matters, contact the Law Offices of Morton J. Grabel here in his Temecula Office at (951) 695-770. Mort is a graduate an ABA Law School, possesses an MBA and is a licensed Real Estate Broker. He is currently the President of the Mt. San Jacinto/Hemet Bar Association.

Written by Morton J. Grabel

For more information or to discuss your case please call the Law Offices of Morton J. Grabel, here in Temecula at (951) 695-7700. Mort is a graduate from an ABA & AALS Law School and has been an active member of the Bar of California for more than 20 years. He is presently the President of the Mt. San Jacinto/Hemet Bar Association.

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