Bankruptcy – Should I File or Tough it Out with My Creditors?

“Should I file bankruptcy or tough it out with my creditors?”

As you can imagine, I get this question quite often from potential clients from Rome, Dallas, Hiram, Douglasville, Dalton, Cartersville, Chatsworth, Calhoun and Ringgold Georgia. You might be surprised to know that I often tell some people that they don’t need to file bankruptcy. I will give you my top three examples of who should and should not file for bankruptcy.

People Who Should Not File Bankruptcy

1.  Sometimes I will meet with a person whose only problem is a house in Georgia that they don’t want anymore.  This person will have no other debt problems other than the house.  If they could only get rid of this awful burden that is hanging over their head, all of their debt problems will be solved.  If this person has only one mortgage on their house, I will most likely advise them not to file bankruptcy.  The reason for this is that the mortgage company will foreclose and most likely never go after this person for any deficiency.  To collect on a deficiency in Georgia, a first mortgage holder must file a confirmation of foreclosure within 30 days of completing the foreclosure on the home.  If they fail to do so, they can’t collect any deficiency.  Click here to see a previous blog post I wrote on this topic.

However, if there is a second mortgage involved, the my answer will be different.  Some second mortgage companies are relentless in pursuing deficiencies.  In some cases, the second mortgage company may settle for a lump sum payment.  In other situations, the will not.  A debtor in that type of scenario most likely will file for bankruptcy.

2.  If Social Security is your only source of income, I most likely will tell you that you should not file bankruptcy.  Click here to see a post I wrote on whether or not someone on social security should file for bankruptcy.

3.  If someone is about to inherit a lot of money, they should not file bankruptcy unless they are willing to let the trustee take it and use the money to pay their debts.

People Who Should File Bankruptcy

1.  Someone whose home is about to get foreclosed.

2.  Someone whose car is about to get repossessed.

3.  Someone who is about to have their wages garnished.  In Georgia, a creditor can garnish up to twenty five percent of your net wages.  Most families cannot afford to lose twenty five percent of their income.

Every case is different.  To know for sure, you should schedule a free consultation with me so that we can review your entire situation.  Call my receptionist at 706-295-0030 to schedule your appointment.

Other Posts:

1.  Should I sign my house over to someone else before I file for Chapter 13 or Chapter 7 bankruptcy?

2.  What is an objection to discharge?

3.  How much does it cost to file?

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