Feeling anxiety and worry over money, bills and debt is common in California these days. However, it may also be a sign that a person's finances are out of control. If people who worry about money are also unsure how much debt they owe, or if they are using their credit cards for groceries and bills and then only making the minimum payment on the cards' balances, those people may consider filing for personal bankruptcy protection.
Bankruptcy may be a good solution for relieving debt that has become overwhelming. Chapter 7 may be the best option for people who cannot afford to make any payments on what they owe. This type of bankruptcy liquidates assets to repay creditors, and any debt that is left may be erased. However, certain debt is excluded from bankruptcy, such as child support, alimony, student loans, and most unpaid taxes. People often consult an attorney when unsure if their debts qualify.
Those who own a home and have a steady income may wish to consider Chapter 13 because Chapter 7 may require the home be liquidated with other assets. People under Chapter 13 generally get to keep their homes (which is also possible in some Chapter 7 cases). Their debts will be reorganized into more manageable payments. Chapter 13 may be the best option for people who make too much money to qualify for Chapter 7.
Those in California who receive calls from creditors and lie awake at night worrying about money do have alternatives. Perhaps the answer is as simple as debt consolidation or credit counseling before taking the step toward personal bankruptcy. However, allowing the situation to continue without resolution may only compound the problem. Consulting an attorney to discuss one's options may bring one the relief needed for a good night's sleep.
Source: deseretnews.com, "Financial Tips & Tricks: When is bankruptcy the best option?", Andrew Clawson, June 21, 2016