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Legalities in Going Broke – Things You Need To Know

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  • Bankruptcy is a legal option for those facing financial difficulty, with different types, such as Chapters 13 and 7, available.
  • Debt settlement allows for the negotiation of debt payments with creditors. You may be able to settle for a reduced amount.
  • Debt collectors must follow the rules outlined in the Fair Debt Collection Practices Act (FDCPA).
  • Your creditors may be willing to work with you if you explain your situation.
  • You have rights if facing foreclosure, including being informed of the default notice before the process begins.

You’re not alone if you’re in a tough spot and struggling to make ends meet. Many people find themselves in a position where they are facing financial difficulty, and it can be overwhelming. But did you know legal options are available to help you get back on your feet? In this blog, you will learn about the legalities of going broke.

You can file for bankruptcy.

Bankruptcy is a legal process that can help you eliminate debts or restructure payments. There are many types of bankruptcy, so it’s essential to know which one is right for you. Here are the most common types of bankruptcies you need to know about:

Chapter 13 Bankruptcy.

Chapter 13 Bankruptcy is a personal reorganization plan. This type of bankruptcy enables you to pay your debts for three to five years based on the amount of income you have available.

Chapter 15 Bankruptcy.

Chapter 15 Bankruptcy is a special type of bankruptcy designed for companies, partnerships, and individuals operating in more than one country. This type of bankruptcy allows you to reorganize and restructure your debts on an international scale.

Debt Settlement.

Debt settlement is an alternative to bankruptcy that allows you to negotiate with creditors and settle your debt for a reduced amount. This can be a great option if you are unable to pay off your debt in full but want to avoid filing for bankruptcy.

Chapter 7 Bankruptcy.

Last but not least is Chapter 7 Bankruptcy, also known as liquidation bankruptcy. This type of bankruptcy involves selling your assets and using the proceeds to pay back creditors. It eliminates your unsecured debts like credit card debt, medical bills, and personal loans.

This is the type of bankruptcy that you will most likely file if you are going broke. If you want to know more about this, speak with an experienced Chapter 7 bankruptcy lawyer to make sure it’s the best option for your circumstances. A Chapter 7 bankruptcy lawyer can provide you with invaluable advice and assistance throughout the bankruptcy process. They will be able to assess your financial situation and guide you through the filing process.

By being knowledgeable about the different types of bankruptcies, you can make a more informed decision about which one is best for you and your circumstances.

Debt collectors have rules they must follow.

Collecting debt

If you are in debt, you may be dealing with debt collectors. You may feel like they are harassing you, but there are rules they must follow. The Fair Debt Collection Practices Act (FDCPA) outlines what debt collectors can and cannot do.

For example, they cannot call you before 8 am or after 9 pm, they cannot use threatening or abusive language, and they cannot misrepresent themselves or the debt. If a debt collector violates the FDCPA, you can take legal action against them.

Your creditors may be willing to work with you.

If you’re struggling to make payments, it’s worth reaching out to your creditors to see if they’re willing to work with you. They may be open to negotiating new payment terms or forgiving some of your debts. It’s important to remember that your creditors want to get paid, and if you’re unable to pay them, they may be open to working with you to get what they can.

You have rights if you’re facing foreclosure.

Foreclosure sign

If you’re at risk of losing your home to foreclosure, you have rights. The Consumer Financial Protection Bureau has put together resources to help homeowners understand their rights in the foreclosure process.

For example, your lender must send you a notice of default and give you time to catch up on your payments before they can foreclose. You also have the right to contest the foreclosure in court.

No matter what financial situation you find yourself in, legal options are available to help. From filing for bankruptcy to negotiating with creditors and understanding your rights when facing foreclosure, it’s essential to understand the different legalities of going broke to decide which option is best for you.

It’s also worth reaching out to a lawyer or other experts specializing in these areas if you need more guidance or assistance. Taking control of your finances can be stressful, but knowing you have access to resources makes things easier.

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