Many Californians are struggling with the burden of excessive debt brought about by large credit card balances with over the top interest rates, unaffordable mortgages, loss of income from job loss, business failure or divorce.
For some the financial crisis came about as a result of spending beyond their means often induced by unrealistic expectations of being able to repay high interest credit cards or heavily secured debts such as home mortgages or car payments. For others, unanticipated events such as sudden illness, layoffs, death or divorce are precursors to financial crisis. Still yet, others continue with the unrelenting burden of debt yet manage to avoid insolvency.
These financial difficulties often take a huge toll on our psyche. The constant anticipation of approaching due dates, the calls from creditors demanding payment, the threat of lawsuits and the ever increasing debt take away from our peace of mind and negatively impact our families . We do what we can yet what appears in the horizon is only more debt.
For debtors overwhelmed with debt or otherwise facing serious financial problems, voluntary bankruptcy can be an important alternative. There are however, other alternatives available and debtors should contemplate those alternatives before proceeding in bankruptcy. There is no substitute for an informed, sober decision regarding bankruptcy as your financial future depends on it.
Federal law offers debtors many rights and protections under the bankruptcy code. These rights and protections include the discharge of some unsecured debts, the automatic stay, protection against discrimination and the right to exemptions. There are some disadvantages to bankruptcy such as the adverse impact on the debtor’s creditworthiness, expense, difficulties with continued operation of businesses and mandatory disclosure by the debtor of assets, debts, income and financial affairs.
Many debtors find that bankruptcy’s advantages and the ability to get a fresh start outweigh its adverse consequences. This is usually the case when the alternatives to bankruptcy don’t make sense for the debtor. Nevertheless the decision to proceed in bankruptcy should not be made lightly. A competent attorney should explain available alternatives, the advantages and consequences of filing bankruptcy and the available chapters, as wells as the benefits and estimated costs of proceeding under each chapter of bankruptcy.