Thomas F. Miles, Attorney and Counselor at Law
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Personal bankruptcy provides federal statutory debt relief

If you've incurred high credit card debt and/or substantial unpaid medical bills that current income cannot manage, it may be now appropriate to stop and evaluate what to do before collections, lawsuits and garnishments are initiated or escalated against you. In California and throughout the nation, a federal remedy called personal bankruptcy swiftly and effectively wipes the slate clean of a consumer's entire load of unsecured debt. When the total minimum payments on your credit cards is 50 percent or more if your monthly net income, it's unlikely that payment plans or credit relief programs will ever sufficiently remedy the problem.

For people who cannot realistically pay down their unsecured debt, including credit cards, medical bills and unsecured personal loans, the federal government provides a powerful remedy designed to give consumers a fresh financial start. This is a personal bankruptcy filing. Except for a few areas of inviolate debt, such as child support and court fines, the government provides for individuals or married couples to wipe the slate clean and get a fresh start by filing a federally-authorized personal bankruptcy.

For a small amount of debt under about five thousand dollars, you may be able to successfully regroup by obtaining the services of a certified consumer credit counseling agency that handles debt re-structuring agreements with your creditors. But for larger amounts, those plans generally don't work for a variety of reasons. It's not always possible to get all creditors to agree. But most importantly, the amount of money that you can offer where there is high debt and several creditors must necessarily be so small that creditors often back out of or refuse to join in the agreements.

In California as well as elsewhere, for a consumer who'll be seriously strapped by making minimum payments on credit cards or medical bills, a Chapter 7 personal bankruptcy is usually the ideal vehicle for swift and across-the-board relief. If you're up-to-date on mortgage payments, you may also usually keep your house in a Chapter 7 by continuing to pay on the mortgage. You can also reaffirm car loans and retain the vehicles. Standard household personal property is also exempt under federal law, so that most consumers do not relinquish assets in a Chapter 7.

Source: MSN Money, "Barely making payments: Now what?" Stacy Johnson, April 16, 2013

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Thomas F. Miles, Attorney and Counselor at Law
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