If you are in over your head financially, and you’re thinking about declaring bankruptcy, it is important to consider all of the advantages and drawbacks of doing so before you actually file. Although bankruptcy can be an effective financial tool when it comes to managing or discharging various kinds of debt, it has its limitations and may not be right for everyone. If you are considering filing for Chapter 7 or Chapter 13 bankruptcy, turn to Pearce Law Firm in Foley, Bay Minette, and Atmore, AL, for guidance during every step of the proceedings.

Understanding Bankruptcy

What It Can Do

The main reason people file for bankruptcy is to eliminate or reduce their unsecured debt. This includes medical debt, personal loans, and credit card debt. If you are behind on payments and creditors are harassing you, declaring bankruptcy will also enact an automatic stay, which will stop all collection efforts from creditors so you can focus on regaining your financial footing.

What It Cannot Do

If you are drowning in credit card debt and cannot even make a dent in the interest that accrues every month, declaring bankruptcy may be the smartest financial decision you ever make; however, it is important to understand all of its limitations.

For example, filing for bankruptcy cannot eliminate tax debts, past due child support obligations, or student loan debt. If you are struggling to pay back any of these kinds of debt, bankruptcy may not be the answer, unless you are also facing an overwhelming amount of credit card debt. In such a scenario, you may be able to discharge your credit card debt by filing Chapter 7 bankruptcy, and then you can focus on paying back the other kinds of debt with whatever income you have.  

If you are considering filing for bankruptcy, the legal team at Pearce Law Firm in Foley, AL, will assess your financial situation and help you determine the best way to proceed. You can learn more about the legal services this firm provides by visiting their website. To schedule an initial consultation with a seasoned attorney and determine if you are eligible for Chapter 7 bankruptcy, call (251) 368-2992.