Bankruptcy can keep debt from stringing you along
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Bankruptcy is a fit solution for many North Carolina consumers in over their head with debt, but is it right for you? Unfortunately, like with so many things in life, there is not a litmus test to tell you whether filing bankruptcy is the right thing to do. Today we’ll tell you some of the pros and cons of choosing bankruptcy to help you decide if it’s a fit. These are general points, but if you’re interested in finding out how bankruptcy applies to your specific debt circumstances, the Law Offices of John T Orcutt helps North Carolina consumers understand their options.
Dollar amount of debt doesn’t matter
You may have $15,000 in debt or $115,000 in debt – over and above your mortgage or car loan – that's affecting you. It’s not the dollar amount of the debt that should concern you, but whether you can afford to service that debt on your income. High earners can generally accommodate more debt in their lives and lower income earners usually can deal with less. No matter your income or debt level, the important factor is whether paying the debt is overly burdensome. If you can only pay minimums, often pay bills late, and are maxed out on all credit lines, this is a cause for concern.
Income level doesn’t matter
Earners at all income levels have turned to bankruptcy for debt relief, and you should not assume that a very high level or very low level of income will preclude you from filing bankruptcy. Chapter 7 is the most sweeping type of debt relief and will wipe out 100% of unsecured debt such as credit cards and medical bills. There is a Means Test to qualify, but high income does not disqualify you. It’s the proportion of debt to income that’s a factor. You can earn millions, but if you have a disproportionate amount of debt, you can still get relief. And Chapter 13 is open to most wage earners as an alternative.
What does matter?
A critical consideration is how debt is affecting your life. If you’re up all night worried about your debt, considering a solution like bankruptcy makes sense. If you’re tormented by non-stop calls from debt collectors, putting an end to debt stress makes sense. If you live paycheck to paycheck and can’t save for a rainy day – or retirement – because of your debt, looking for a way out of the mess absolutely makes sense. If you feel like your physical and mental health are at risk because debt is taking a toll on you, bankruptcy may be the tool you need to restore yourself and get a fresh start.
What’s the downside?
Filing bankruptcy will have an impact on your life – that’s true. First, your credit score will take a dip of 100 points or more. However, if you’re paying bills late and maxed out on credit cards, your credit score is already taking a beating and bankruptcy, at least, will allow you to reset and start rebuilding your credit. Second, bankruptcy does come with financial costs including filing and attorney fees. However, over the long run, these expenses pale in comparison to what you will pay in late fees, interest costs, and legal fees if you’re sued over debt collections.
The key is to weigh the benefits and risks associated with staying in debt versus choosing bankruptcy. Bankruptcy is not a fit for every debt circumstance but, for many North Carolina consumers, can be a life-changing intervention that allows them the financial fresh start and peace of mind they need. To find out more, contact the Law Offices of John T Orcutt for a free North Carolina bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Call +1-919-646-2654 now and ask about zero down bankruptcy.