We have had many individuals looking for Bankruptcy Lawyers in Las Vegas NV. In this article, we will compile some of the reasons people file for bankruptcy, and we will answer some of the questions that we hear from many of our clients.
First, let’s look at some of the reasons why people will want or need to file bankruptcy. People file bankruptcy for various reasons.
An illness can be a reason to file bankruptcy. Having an illness can snowball into bills that can get out of control. You may not be able to work due to the illness, and the medical bills can pile up as a result of the illness. Even if you have insurance, the medical bills can add up. There are several different medical plans offered by several different providers. If you have a plan with a lower monthly payment, chances are that the deductibles and percentages for your out-of-pocket expenses will be higher.
Credit card debt
If you are irresponsible with your credit cards, your balance can get pretty high really quickly. Let’s say for example that you have four credit cards with balances of $10,000 each. You start using one of the cards and it ends up maxing out. Once the bills start coming in, you do not pay more than the minimum payment. You are essentially just paying the interest and none of the principal. That card will not see any decreases in the balance.
When you start using the second card and the balances are not being paid, you will now have two cards with high balances.
Here is a side note for only paying the minimum monthly payment. If you only pay the minimum and nothing more, it will take many years to pay off that debt, assuming you are not making any more purchases with the card. Depending on your interest rate, you will probably end up paying double the balance. So on a $6,000 balance, you will end up paying roughy $12,000 by only paying the minimum payment.
That is a lot of extra money, for only one credit card!
Let’s get back to the example.
Now, with two credit cards with high balances, you might be tempted to get a cash advance from one of your other credit cards to take care of the monthly payments of the other two cards. Now instead of paying down the debt, you have increased your liability exponentially. Notice how this can snowball until the debt is totally out of control?
If a person is in this type of situation, there may be more debt on the horizon. These may include payday loans and title loans. Here in Las Vegas, there is a huge market for payday and title loans. These are loans where you can get quick cash, but the loan companies charge a ridiculous amount of interest. You end up paying a lot more than the original amount.
Home foreclosure can also be an issue, especially if you originally bought into a property that is basically more than you can afford. An example of this is where the buyer took out an interest-only loan on a home. They figure that the first few years they are only paying the interest on a home anyway, so they take that loan for a couple of years. They are betting that the home will make a gain in value, so then they will refinance into a traditional loan.
Notice we used the word bet.
You never really know if a home is going to gain value or lose value, so if it doesn’t gain value, you cannot refinance. The bank will not refinance the loan if the home’s value is less than the remaining loan amount. On your interest only loan schedule, usually a balloon payment is required after a couple of years. The interest rate may also raise significantly. The home has not gained value, and the monthly payment is now more than the original amount.
You may need to look into Bankruptcy Lawyers in Las Vegas NV.
Loss of job
Losing one’s job would be another reason a person would file bankruptcy. If the economy tanks like it did in 2006, many people could lose their jobs. It is said that you should have a six month savings in case of an emergency such as job loss. The reality is that most people do not have this cushion. If a person loses their job, their bills may immediately start to pile up.
Even if you have this six month cushion, you may not be able to find another job within that timeframe. Depending on the type of work you do, it may take longer to find a new position that fits your skill set.
How do you actually pay your bills when you are not employed?
Now the question is, “Should I file for bankruptcy?”
One way to answer that is to look at your situation. If you can bail yourself out and pay off your debt in six months, then you should not file for bankruptcy. Of course you would have to hunker down, stay on a strict budget, and pay off all of the debts. You just need to focus, and stick to your plan.
If after the six months you are in the same position, debt has not decreased, and it is an endless cycle, you may want to consider filing for bankruptcy. Thee is no need to struggle indefinitely. A big reason the bankruptcy law was implemented is to help honest individuals get a fresh start.
Keep in mind that in addition to the financial toll, many people also have a physical toll in relation to their debt. There are people out there that are so stressed out, that they get what we call “stress balls” on their back. This is where the muscles just contract and cause physical pain. Debt will tear families apart, and lead to divorce. Marital problems can arise from this issue. This is especially true when the individuals disagree on how to spend their money.
What about creditors?
You have incurred the debt, and you are behind on the payments. The bill collectors will then start to contact you. What can you do about that?
There is the Fair Debt Collection Act. This was designed to protect consumers. The interesting thing is that many consumers do not believe it is fair at all. We have seen many cases of violations from various collection agencies. For example, did you know that you can tell the collection agencies that you do not want to be bothered at work? They are prohibited from contacting you at your job. In addition, the collectors can only call you at certain times of the day. They cannot call you too early in the morning, and they cannot call you too late at night.
They are not allowed to send you letters if you inform them that you have one of the bankruptcy lawyers in Las Vegas NV, or if you have advised them that you do not want any letters sent to you through the mail. Once again, if you inform the creditors that you do not want them to call you or send you letters, they must honor that. What they can do though is file a lawsuit against you.
In the internet age, there are many online payday loan companies that operate overseas. These businesses to not even follow the laws of the United States, so it is tough to even bring action against these companies for breaking these laws.
Should I go through with filing for bankruptcy?
This is the million dollar question. Many people have a hesitation to go through with filing for bankruptcy. They have misgivings about the process and what will happen after they file. Some of the questions are:
- Will bankruptcy ruin my life?
- Can I buy a car after discharge?
- Will I be able to get another credit card?
- Can I buy a house?
These are all legitimate questions. Bankruptcy will not ruin your life, you are getting a fresh start so you will not struggle anymore. You will be able to buy a car and get credit cards after bankruptcy. The interest rate will be higher, but you will still be able to apply for these items. You will also be able to buy a house after bankruptcy. There are a few options out there to help the consumer purchase a home.
If you already have a house and a car, in most cases you can keep both of them as you go through the process.
These are some of the most common questions about bankruptcy and how you can take advantage of the bankruptcy law to get a fresh start for yourself and your family. If you want to get over that hump and start the process, contact us, the best bankruptcy lawyers in Las Vegas NV. We will help you with all of the paperwork and make sure that you are in a position to get your debt discharged.
Call us for a free consultation today.