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Managing finances is a tricky affair. People often find it difficult to keep their finances above board. However, there can come a time, when you might have to consider bankruptcy as an option. Individuals can opt for Chapter 7 or Chapter 13 bankruptcy; however, the former is preferred. According to Los Angeles based bankruptcy law firm Recovery Law Group, the situations where Chapter 7 bankruptcy is the best way out include:
- Majority of your debts are due to excessive use of credit cards. Heavy reliance on credit cards can lead to an excessive amount of loans which can send anyone down the rabbit hole.
- Foreclosure notice can be a rude shock for anyone. You could end up losing your home if you are behind mortgage payments. Banks can foreclose on your property if prompt action is not taken. Filing for bankruptcy under Chapter 7 puts an automatic stay in place which prevents any collection action including foreclosure.
- If you are heavily under debt, wage garnishment is a reality which cannot be avoided. Lenders can garnish your salary to collect against your debt. The automatic stay can put a hold to wage garnishment also.
Though these reasons aren’t enough, they give you a general idea of when to look for bankruptcy as a way out. It is important to know the pros and cons of bankruptcy before you decide to file for it. You can consult with experienced bankruptcy lawyers Los Angeles about your case at 888-297-6023.