Bankruptcy Basics

When is Bankruptcy a Good Option?

Bankruptcy is an important part of our economy. It does not mean that you failed, it does not mean that you are irresponsible, it is there to help when you find yourself buried in debt. There are many ways to work your way out of debt, but the fact is that if you cannot afford your bills, bankruptcy may be the best solution for you and your family. There are consequences to filing bankruptcy that you must understand, and not everyone is eligible to file for bankruptcy in the state of Georgia. But, if you qualify and you cannot afford your debts, bankruptcy may be your path to a fresh start.

Why do People file for Bankruptcy in Georgia?

There is a step in the bankruptcy process called the means test. This test basically measures whether you have any way to afford your current debt payments given your income and day to day expenses. If you don’t have enough money available to pay your bills, then it is unreasonable to expect that you can pay off your debts. That situation can become all to real for many Americans. The most common causes that put Georgians in this situation are:

  • Job Loss – with the economy struggling, thousands of jobs in Georgia have disappeared. Without a job, a household’s income dries up quickly, leaving bills to pile up and debts to grow. Even once you find a new job, it can be impossible to catch up again.
  • Medical Bills – this is the most common type of debt that can grow to incredible levels. An unexpected visit to the ER or a life-saving surgery can put you deep in debt overnight. The fact that a single accident can destroy your financial situation shows how bankruptcy is nothing to be ashamed of.
  • Unexpected Expenses – we all budget for the things that we can. But sometimes we are taken by surprise by a natural disaster, theft, car accident or lawsuit. Any event that suddenly puts you thousands of dollars in debt can make it impossible to afford your debt.
  • Divorce – beside the emotional distress that divorce causes, it can also bring a number of huge expenses. Legal fees, spousal support and child support can be difficult to manage on a single income.

 

Is Bankruptcy the Solution for Me?

Bankruptcy is a big step – it is important for you to understand your options as well as you can. Be sure to consider the consequences of bankruptcy in Georgia:

  • Credit Score – immediately after you file bankruptcy, your credit score will go down. Lenders will be less likely to give you a loan for a few years. Over time, your score will recover, and being able to afford your payments will let you rebuild a positive history. But you may not be able to get a loan for a new home or vehicle for a while.
  • Legal Fees – filing bankruptcy isn’t free, but your attorney will work with you to make it affordable. Bankruptcy attorneys work with people in dire financial situations every day, so payment plans are common.
  • Stress – it can take months to complete the entire bankruptcy process. You’ll need to gather up some paperwork, work with your attorney on how to handle your debts, and complete a means test and debtor education course.

 

But, even with those concerns, bankruptcy can mean a fresh start for you and your family. Lifting the burden of insurmountable bills may be the best way for you to get back to a comfortable life. Bankruptcy is often a very big step forward when otherwise every missed bill is a step backwards.

The best thing you can do is speak to an attorney. Talk about your debts and other bills, your family, and your goals. Your attorney can give you a good idea of your best options, and work with you to develop a plan.