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Are you hesitating when it comes to filing for bankruptcy?

Like many people, your financial struggles may have started small. You may have accrued a relatively small amount of credit card debt after making an expensive purchase, but you had the intention of paying it off quickly. Unfortunately, that or another similar scenario may have only sparked the beginning of your financial troubles.

A sudden event, like job loss or a serious medical emergency, may have shattered your financial security. As a result, that small amount of credit card debt may have snowballed into something more unmanageable. Now, you are considering bankruptcy, but you still have some trepidation regarding the possible outcomes.

Bankruptcy: Is it time?

Each month when you sit down to assess your finances, you end up with the same result. It is frustrating to work so hard and still be unable to make your paycheck cover your bills. If you are consistently behind on your credit cards, mortgage, car payment or other debts, you may find it hard to sleep at night and dread answering the phone when it rings.

Most everyone goes through hard financial times now and then. It often doesn't take much to send your budget into disarray, and it may take time and sacrifice to get things back in order. However, do you know when you are in a situation that is futile? If you have ever considered filing for bankruptcy, you may wonder when the time is right.

Negotiating with your creditors

When a creditor or debt collector calls, unpleasant as it may seem, it is an opportunity to negotiate. You may end up with good results. Some creditors are willing to hear what you have to offer rather than having to spend the money to file a lawsuit or initiate collection activities. Your first step is understanding your rights and options.

Debt collectors may not harass you by calling multiple times in a short period or if you have asked them to stop calling. They can't call early in the morning or late at night, and they should never lie, threaten or use profanity when speaking to you. When they obey these rules, you may feel free to negotiate.

Bankruptcy and your tax debt

Struggles with debt can affect every area of your life. If you have fallen behind on your mortgage, credit card bills, medical debt or others, you may be feeling as if you are drowning. Collection letters and calls seem to come every day, and you may find it difficult to eat, sleep, and concentrate on your work or family obligations. After considering your options, you have decided to see if bankruptcy can bring some relief.

However, if your debt burden includes taxes, you will need to understand the rules regarding bankruptcy and federal debts. Taxes are a priority debt, which means bankruptcy may not relieve your obligation to pay them except under certain circumstances.

Are you ready to seek relief through Chapter 7?

The holidays often leave people a little short financially, and it may take a while to get the bills back on track. For many, this splurge once a year is worth tightening the belt for a few weeks to catch up, and then it is back to a smooth-running budget.

Perhaps this does not describe your situation. If your holidays were leaner than usual and you know it will take more than a few weeks to straighten things out, you may feel a bit of a panic as you step into the new year. In fact, you may see no light at the end of the tunnel and are now looking at your options for finding debt relief. Perhaps you are wondering if you qualify for Chapter 7 bankruptcy, along with how this option may help you.

Your options when creditors threaten wage garnishment

Any setback can create chaos with your budget. The loss of a job, a divorce, a medical crisis or a home repair emergency are just a few common examples of events that can wipe out your savings and leave your credit overextended. For some, rebounding is just a matter of time. Others fall hopelessly behind and must face the onslaught of creditors calling and sending letters demanding payment.

If you are in this situation, you may worry how far a creditor can go to collect the debt from you. Receiving notice that a creditor intends to garnish your wages can be frightening and unsettling. After all, your wages may barely cover your living expenses, and losing them may be devastating for your family.

How an automatic stay can help

It's difficult to know how to handle outstanding debt. If your creditors are pressing you or threatening to take legal action against you, you may soon face wage garnishment or a lawsuit.

Most people who find themselves here must seriously consider filing for bankruptcy. This debt relief avenue can have many benefits. In particular, an automatic stay may help you with creditor actions.

Addressing creditor claims in your Chapter 13 repayment plan

If you have chosen to move forward with Chapter 13 bankruptcy and qualify for the process, you are helping yourself get your financial difficulties under control. Of course, the proceedings will take a considerable amount of work, and you will need to make sure that you address every step of the process correctly.

Chapter 13 involves repaying your creditors over time in accordance with a court-approved repayment plan. If you deviate from your approved plan, you could put your bankruptcy case in jeopardy. Having the right information may help you create a plan that will obtain court approval and help you get back on financial track.

What really happens to a credit score after bankruptcy?

Bankruptcy is not something to rush into, especially if there are other options available to you. However, if you have exhausted your alternatives and your creditors refuse to negotiate, you may feel you have no choice but to file for bankruptcy to find relief from your debt burden. Like many in California, you may be wondering how this step will affect your credit rating.

Any agency that extends credit will look at your credit history. While you may vow never to return to this place of financial struggle and frustration, at some point, you may want to consider buying a home or car. A good credit rating will be important, and you may hesitate now to seek the relief you need because you fear a bankruptcy can damage your credit score.

Options when facing a lawsuit for credit card debt

If you have reached a point where you are not able to pay your monthly credit card bill, you may have done what many California consumers do: ignore it. You may have stopped opening the envelopes that come in the mail to warn you of the consequences for delinquency or answering the calls demanding payment. Now you are in even more of a bind because the credit card company has filed a lawsuit against you.

Ignoring demands for payment may be one of the worst decisions you can make when you are behind on a bill. Often, creditors are willing to negotiate because they would rather have some of what you owe them than none at all. If you find it difficult to communicate with a credit card company, you can enlist the assistance of an attorney who has experience dealing with creditors and may be able to work out an acceptable resolution.

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