People often have misconceptions about the bankruptcy process. Some view
it as something shameful while others see it as a ticket to get out of
debt with no consequences. Both views are wrong.
It is, at its heart, a financial decision. The process involves a legal
proceeding that takes time and effort to accomplish. Thousands of people
each year will use this process to resolve debt issues that they are unable
to solve otherwise. Most people that file bankruptcy did not plan to use
this method as a way to get out of paying credit card bills, but because
they had something catastrophic happen.
Many people have been in trouble financially because of the recession.
In many areas of the U.S., as well as California in general, people have
had long term unemployment. While the nation is slowly getting back on
track, many areas of California had as high as a 15% unemployment rate
for extended periods of time. At the same time, single-family homes lost
equity in most areas. People could not pay their bills, they could not
find work, and they could not sell their homes. With many banks refusing
to allow short sales or a deed in lieu or even allowing people to obtain
a loan modification, many people have been at their wit’s end trying
to decide what to do.
This has made many people seek out advice from our bankruptcy lawyers in
Lancaster, CA and other offices. People may be afraid of getting a foreclosure
on their credit report because they have heard that this is a long-term
problem for getting credit in the future. People are often uncertain which
path to take as to bankruptcy or foreclosure. Additionally, people may
have credit card debt, a car loan, student loans, tax liens, medical bills
or other debt that they cannot manage.
How effective a bankruptcy will be for each individual will depend on the
type of debt that is owed. Our lawyers in Lancaster, CA , as well as our
other offices, will give counsel on the types of debts that are dischargeable.
Normally debts to the IRS, child support, spousal support, and criminal
restitution cannot be wiped out by bankruptcy. There are also some other
types of debt that fall into this category but in most cases, average
consumer debt such as mortgages and credit card debt can be eliminated.
For people that have late balances, very high balances, accounts that have
been charged-off, or many collection accounts, bankruptcy may be the best
solution if the person cannot find a way to pay these debts. Using the
bankruptcy process may be the new start that people need to get back on track.