If you've been in debt for some time, it can feel like a big weight on your shoulders. Sometimes it seems like there is no escape. The best method is to handle debt correctly, and sometimes that means filing for bankruptcy. For Georgians, filing Chapter 7 or Chapter 13 is a reality, but not a bitter one. Bankruptcy can be very beneficial.
How? You can be free of debt and get a fresh start. But before that even happens, you still have many options, namely avoiding the debts in the first place, or acting while you still can pay them off. If it's already happened, you can still file bankruptcy and avoid further problems. This guide goes over key rules on debts, paying them off, filing for help, and ending with a plan to never get into debt problems again.
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Rules on Debts
Not all debts are equal. Some are clearly more important than others. For example, if you have an interest rate of about 10% on your credit card, and you owe $2,000, paying only on the interest is not wise. In some cases, you have no choice. Even worse is not paying at all and watching your debt sky rocket. If you have no means to get out of credit card debt, act quickly by hiring an experienced Georgia bankruptcy attorney. If you have a lot of credit debt, or if you have past due medical bills, Chapter 7 can help. Credit and medical bills are unsecured debts, meaning there is no asset which can be taken back. A house or car would be a secured debt.
Another debt which should rise above others is the home, a secured debt. The problem for Georgia residents is quite often falling behind on mortgage payments. This costs a lot more than an interest rate. Unless you act quickly, you can lose your home to foreclosure. While few lenders will foreclose on a home or car after one missed payment, each missed payment means you might receive foreclosure papers.
Secured debts are usually more important, but the problem is these can be more difficult to discharge at no loss. For example, if you filed Chapter 7 bankruptcy and used it to discharge your mortgage debt, you lose the home. If foreclosure papers have already been filed, technically you can stay in your home for several weeks but will be forced to leave once the foreclosure continues.
Getting Help
If you have major debt problems, working with debt management companies is a mistake. These companies do nothing you cannot do by yourself. Say you have a problem with credit cards, spending thousands more than you can afford every month. You pay off one credit card and max out another. Yes, working with debt management companies can help in small ways, but it teaches you nothing, you are at risk financially, and if you miss one payment your creditor can cancel the plan.
On the other hand, if you consult with a Georgia attorney, you are learning a lesson. Why? While bankruptcy can be very beneficial, it also teaches you or a loved one about debts and what happens when you can't pay them. If you almost lose a home because of past due debts, that's a big lesson. And with bankruptcy you are better protected. That's why at least consulting with professional counsel, an experienced attorney, is very smart. It does not mean you have to file, but it gives you the best help available.
Saving Money
You can technically save money by filing for bankruptcy. Yes, you will likely be hiring a lawyer, paying a court fee, and in Chapter 13 actually paying some if not all the debts. But think about it a different way. If you have $50,000 in unsecured debt, Chapter 7 can likely discharge all of that for the price of a lawyer and a $299 court fee. If you are about to lose a $150,000 home, a Chapter 13 bankruptcy can often save the home from foreclosure. So as you can see, filing either Chapter 7 or Chapter 13 saves you money.
Debt problems are very common, and so are bankruptcies. There is a stigma that filing for bankruptcy is wrong. In fact, filing for help is quite often the best decision you can make.
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