Bankruptcy: Considerations when overwhelmed with debt

Many hardworking people in California are struggling with debt. Despite their commitment to paying their bills, certain situations, such as a divorce, medical conditions or unexpected loss of employment, can impede their ability to do this. After many people struggle for months or years to attempt to control their debt, some come to realize that they will not be able to do so on their own, and interventions such as filing for bankruptcy may be the best choice for their individual circumstances.

Because many people have little experience with the bankruptcy process, they often have multiple questions. For example, they must decide what type of bankruptcy is best. Chapter 7, in which debts are discharged, tends to cost less and be a faster process, but there are certain income requirements that must be met. Chapter 13, which involves a court-approved repayment plan for debts, is often a better choice for those who do not meet the income requirements for Chapter 7 or who have a more complicated financial situation.

There are consequences of filing for bankruptcy. For example, many people struggling with debt worry about how seeking such protection will impact their credit score. However, most people have likely already seen a dip in their score due to missed payments — a trend that could continue if they are unable to catch up on their own.

Seeking bankruptcy protection is not a decision that is to be entered into lightly. Fortunately, there are experienced professionals who can help those struggling with debt carefully weigh the pros and cons of taking such action. Often, those who choose to seek such protection report feeling immediate relief, knowing that their debt is managed, and they will stop receiving harassing phone calls from debt collectors.

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