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Filing for St. Louis bankruptcy is accompanied by positive changes. It opens the door to healthier financial habits and a clean slate, but there are also drawbacks. St. Louis bankruptcy will impact your credit score and make it difficult to receive financing or a loan in the months and years after discharge of Chapter 7 or Chapter 13 bankruptcy. It is important that anyone in St. Louis considering bankruptcy carefully weigh the options, including alternatives to bankruptcy.
If you are uncertain whether St. Louis bankruptcy is right for you, an experienced bankruptcy and foreclosure lawyer can help. However, there are also certain circumstances that make it more likely that St. Louis bankruptcy will improve your financial situation and future. Here are five signs our team at Ledbetter Law Firm looks for when advising clients.
#1: Your Savings Are Exhausted on Monthly Payments
Living paycheck to paycheck can be stressful, but it is manageable. Real issues arise when you start paying monthly and regular bills out of your savings or request access to your retirement plan. In these instances, your living expenses are exceeding your income and there are limited opportunities to realign your costs with the amount of money you make.
Of course, you don’t need to file for St. Louis bankruptcy if you use savings to make one or two payments. It is common for people to use savings when making a big purchase or putting a down payment, you may even need savings for medical expenses after an injury or accident, but when your savings are exhausted and the monthly bills are still outstanding, it is time to consider if St. Louis bankruptcy is right for you.
#2: Your Wages Are Being Garnished
When you miss payments for several months in a row, creditors are going to take action. Often, the first attempts to collect a debt include phone calls and other contact with the debtor. The credit card company, bank, or hospital will hand off the task to a debt collector and the intensity of these calls will increase.
If still unpaid or outstanding, the creditors will eventually take further action and seek a court order to garnish your wages. Under this legal arrangement, creditors are given the right to collect a portion of your paycheck, as approved by the court, in order to recoup the balance of the debt, interest, and late fees. For many debtors, a St. Louis bankruptcy is a way to protect income from wage garnishment.
#3: Your Cash Flow Problem Is Long-Term
Many people will encounter temporary cash flow problems in their lifetime. It could be the result of an injury or loss of a job that leads to a deficit between what is coming into your bank account and what is going out. These short-term problems are rarely caused to file for St. Louis bankruptcy; although, if you are concerned an accident, illness, or job loss are overwhelming your financial situation you can talk with a bankruptcy attorney in St. Louis.
When a cash flow problem is long-term, it is time to seek advice on bankruptcy. Some of the same causes lead to a long-term cash flow crisis. For example, an accident or complex lawsuit may drain your savings account and overwhelm your income. If these events are substantial enough, you may have months or years of a deficit, which is cause for considering St. Louis bankruptcy.
Bankruptcy is a good option for individuals facing long-term shortfalls or cash flow crises because at the discharge of your St. Louis bankruptcy, your remaining obligations and debts are discharged. You can start over without oppressive payments hanging over your head.
#4: You Are Borrowing from One Creditor to Pay Another
Circular debt is a clear sign that bankruptcy could help your financial situation. Whether you make $25,000 or $250,000 a year, you need to live within your means. If you accumulate excessive debt, to the point you take on more debt to meet other obligations, you are certainly living beyond your income.
Borrowing from one creditor to pay another is an escalation in debt and obligations and the sign of poor financial habits. As you continue to borrow, it is likely that creditors will raise interest rates and refuse you the best payment schedule, seeing you as more and more of a risk. The more you borrow the shakier the tower of your debts becomes, and St. Louis bankruptcy could be the only way to save it from collapse.
#5: You Are Overwhelmed by Creditor Calls
If you have missed multiple payments or owe several creditors all at once, it is time to consider St. Louis bankruptcy. In particular, if you are facing daily calls and frequent requests from these creditors to meet outstanding payment obligations, then it is stressful and scary. St. Louis bankruptcy can put an end to these regular phone calls and threats of a lawsuit.
When you file for bankruptcy in St. Louis, or anywhere else in the United States, creditors must cease all attempts to collect their debts. Instead of individual creditors having the ability and authority to request repayment, the process is handled by the bankruptcy court. Repayment is determined by priority and carried out by the bankruptcy trustee, ensuring the creditors with higher priority are paid first.
Ready to Discuss St. Louis Bankruptcy
For many people, it is a difficult decision to file for federal bankruptcy. The legal process can occupy months or years of your life and impact your financial situation well into the future. It is important to carefully consider your decision to file for St. Louis bankruptcy, and the Ledbetter Law Firm can help.
Talk with one of our knowledgeable bankruptcy lawyers when you call (314) 925-0239.