Sacramento Bankruptcy Attorney serving Elk Grove says consumer bankruptcy is more than an option when faced with loss of home or car: it’s a choice between Chapter 7 or Chapter 13 bankruptcy relief

Why do people file for bankruptcy?

Recently I came across a Press Release from October of 2005, written by a colleague bankruptcy attorney in Austin, Texas, who was critical of the new bankruptcy laws currently coming into effect.  He was definitely speaking up against the credit card industry which had lobbied legislators to make it more difficult for consumers to file bankruptcy.  He said the new law assumed that people filed for bankruptcy because they just wanted to beat/abuse the system and get out of paying debts, especially credit card debt.  Speaking from 30 years experience, he claimed to know the real reasons consumers chose bankruptcy over bill paying.  Okay why?

• They had lost their job and could not find a new one fast enough or one that paid a salary comparable to what they used to make
• They were overwhelmed with high unpaid medical bills, despite the fact that most of them had health insurance; or
• They had experienced the financial repercussions of a divorce. Women especially tend to be harmed by divorce, particularly when their ex does not pay them the child support and/or the spousal support to which they are entitled. [Read the full article]

That’s exactly my experience in communicating with my clients.  When you face the loss of your home or car, and filing bankruptcy will allow you to hold on to these possessions, then filing bankruptcy is a clear option – and you can choose between Chapter 7, (liquidation of qualifying debt) and Chapter 13 where, by using income from one’s job or business, a payment plan restructures debt to make it affordable.

Filing bankruptcy is really something a consumer is forced to do because of much more personal (and priority) needs than irresponsible use of credit cards.  Sure, people filled up their credit cards before filing for bankruptcy because that’s how they paid their living expenses while they 1) made less income; 2) had medical bills for medical problems; 3) had personal crises like divorce, death in family, family member had crisis and needed help, had home/car damages not covered by insurance; were impacted in a variety of ways by global weather conditions, floods, earthquakes, tsunamis, you name it.

Consumers need help in dealing with a shift in the economic weather.  Bankruptcy is a tool that leverages the money you have (income/assets) with what you need to spend (expenses/debts).  It’s good to be somewhere in the middle where your income is equal to or better than your expenses, including debt payments.  Bankruptcy can help consumers establish that balance and enable them to move forward feeling secure instead of threatened by further loss.

Please contact our Sacramento office serving Elk Grove at 916-313-9069 or via email at info@california-bankruptcyattorney.com