Once again, the holiday season is in full swing with the malls packed with individual's spending money they don't have. What's interesting is the early holiday sales reports shows an increase in business and it seems that everything is getting back to normal. Or is it just that Americans are spending money they don't have by charging it. Creditors have been loosening up their standards and increasing available credit to people just as in the past. The problem with this is unemployment is still close to 9% and most Americans are struggling to make ends meet. Many experts are predicting that with this extreme holiday spending spree, extreme numbers of people will be filing bankruptcy for their New Year's resolutions. People that are already on the fence and considering filing bankruptcy might just think let's have one more hoorah.
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Currently, the total US consumer debt has reached $2.43 trillion. Factoring this down shows the average American consumer has about $25,000 in credit card debt. This is a frightening fact considering the unemployment rate combined with the fact that the average American household only makes $41,000 a year. This is a holiday cocktail for a mass bankruptcy filing in 2012.
For individuals that have a problem with unsecured debt, Chapter 7 bankruptcy is king. Filing Chapter 7 bankruptcy will allow the debtor to wipe out all unsecured debts including credit card debt, medical bills, payday loans and personal loans. For someone who is overindulged trying to give their family a good Christmas this might be the perfect New Year's resolution. When all an individual's debt consists of mostly credit card debt, it's possible for this individual to walk after filing bankruptcy being virtually debt-free. Although being debt-free is not guaranteed when filing bankruptcy, it sometimes is a byproduct of the process.
There are some complications that a person can incur using a bankruptcy filing to eliminate debt after Christmas spending spree. Although, most people want to hang on through the holiday season before filing their petition, they might have to wait just a little longer. This is one area that a bankruptcy attorney can be invaluable. A bankruptcy attorney will typically know the exact time to pull the trigger. There are different factors that are important to consider when filing bankruptcy. If the individual is filing Chapter 7 bankruptcy they will have to qualify to file by a means test. Most people that are considering filing bankruptcy because they can't afford to pay all their bills probably qualified to file Chapter 7, but this does not excuse anyone from the qualification process. This is another area that a bankruptcy attorney will know how to qualify a person that might otherwise be on the border of being forced into Chapter 13 bankruptcy. Especially at this time of the year, a bankruptcy attorney will put a lot of attention towards the spending habits of their client prior to filing bankruptcy. It's pretty obvious that some people just go a little overboard especially if they know they're filing for bankruptcy anyways. This is one area that makes a bankruptcy attorney squirm, they want their clients to be completely honest to avoid the possibility of the bankruptcy being dismissed because of fraud.
There are two basic reasons that will cause the court to toss out an individual's bankruptcy discharge. The first and biggest faux pas an individual can make is charging on their credit cards knowing that they are planning on filing for bankruptcy after the holiday season passes. This can be considered fraud by the bankruptcy court and can be cause for a dismissal. The other thing is when the creditor decides to contest the debt and goes as far as evaluating the original credit application. If they can find any discrepancies that an individual used on the application, they will ask the court to toss out the bankruptcy because the individuals lied on their application for credit.
Rarely, does the creditor even take the time to contest a bankruptcy filing. In most cases, it will cost the creditor more to contest it then it would to let it go. It becomes a matter of principle when an individual goes out and loads their cards with expensive items prior to filing bankruptcy. This is when the trouble begins. A bankruptcy attorney will be well-versed on any land mines and individual might run into and that's why the client needs to be totally honest and throw all their cards on the table.
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