Factors to Consider When Deciding Whether or Not to File Bankruptcy - Westgate Law

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Factors to Consider When Deciding Whether or Not to File Bankruptcy

Whether you have a history of eviction, credit card debt, a repossessed car, broken cell phone contracts, or unpaid hospital bills, there are many things to consider before filing bankruptcy. If bankruptcy seems like a good way to become unburdened from this type of financial past, which kind of bankruptcy is the right kind, 7 or 13? A good thing to try to figure out is why these troublesome financial occurrences keep happening before considering a major decision like this. Choosing bankruptcy now will solve some past financial issues, but the ability to avoid future financial troubles is just as important. Consider these issues before making a decision.

Broken lease – A broken lease may not show up on your credit report if the landlord didn’t formally evicted you through the courts. If so, the eviction will get reported to the credit bureaus. Landlords who look at a credit history will see the eviction, even if you file bankruptcy.

Old credit card debt – The statute of limitations is a specific period of time in which a lender can sue for unpaid debt. This period begins from the date of last use or last payment, whichever is later. Once that time period is over, the lender can only ask you to pay and cannot sue you. If you can’t be sued you don’t need to file bankruptcy to get rid of them.

Cell phone contracts – The balance of an outstanding cell phone contract is usually very small and the collection company will typically not sue to collect on a small balance. Often you can make a settlement on these types of debits for as little as 20% of the amount due. The settlement won’t help your credit. It is better than having an open delinquent account.

Repossessed vehicle – This type of delinquent account could force you into bankruptcy. If the vehicle is repossessed, the lender sells the car and the remaining balance is your responsibility. The lender can come after you for that balance. If you had a cosigner, that person likely had better credit than you and

Medical billing – Most collection agencies want to settle on these past due amounts and will do so for a fraction of the balance owed. If the amount of the settlement is low enough to afford and is paid, the payment of this bill can be reflected on your credit report.

If you have a number of different types of outstanding debts, it may be in your best interest to file bankruptcy. If you do end up filing, you may want to file Chapter 7, which is an elimination of all your debt. You will need to confirm you are eligible for Chapter 7 bankruptcy before you file.

To discuss your situation in more detail please get in touch with a southern California bankruptcy attorney at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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