Bankruptcy Attorney | What if You Can’t Pay Your Debts
Bankruptcy Attorney. To choose the best options when you can’t pay your debts, you must first assess your financial situation. Start by doing the following:
- Determine if your financial difficulty is short or long term
- Determine whether your property is protected by exemptions
- Learn about your state’s wage garnishment limits.
At that point, you can evaluate the various options and choose the best one for you. Here are some things to consider and options that might provide relief.
What Kind of Debt Do You Owe?
The type of debt you owe will determine what collection actions your creditors are allowed to take and how much time it will take.
Secured debt, such as mortgages or car loans, give the creditor special rights to collect from property that you have pledged as collateral for the loan. If you don’t pay a secured debt, the lender can take steps to collect from the pledged property through foreclosure or repossession.
Unsecured debt, such as most credit card debts, generally require the creditor to file a lawsuit against you and obtain a judgment before it can take drastic collection action such as garnishing your wages or bank account or placing liens against real estate.
Government debt, such as taxes, domestic support, or student loans, are unsecured but they give the creditor special collection rights. In most cases, the government can take your tax refunds to pay the debt and it can garnish your wages or social security without first getting a lawsuit judgment.
Is Your Situation Temporary or Long-Term?
If your financial difficulties are temporary, you may be able to get back on your feet with more time to catch up on payments or a temporary reduction in payments. But if your situation is permanent or long-term, you will need a more permanent solution which will reduce or eliminate your debts entirely.
Are Your Assets Protected by Exemption Laws?
Each state has exemption laws that protect certain of your assets from creditors. (Learn more about exemptions and creditors.) If you file for bankruptcy, exemption laws also protect your assets from the trustee. It is important that you know which of your property is exempt so that you understand which items are at risk for collection and which are safe. This will help you decide which assets, if any, you want to use to pay your debts. To learn more about exemptions in your state, see Nolo’s Bankruptcy Exemption section.
Can Creditors Garnish Your Income?
Depending on the type of debt you owe and the exemption laws available to you, your income may be protected from creditors in whole or part. To find out whether your income is at risk or to what extent, see the Nolo’s Wage Garnishments and Attachments.
Certain income sources, such as social security may have special protections that extend to funds directly deposited into your bank account. For more information, see Protections for Social Security Funds in Bank Accounts. -nolo
Contact a Jacksonville Bankruptcy Attorney today.
We are a small law firm of bankruptcy experts but we deal with big challenges each day. Whether our clients are businesses or individuals, many face serious financial issues. Others may not be as deep in debt but are still suffering due to the stress of their financial situation. Pinkston and Pinkston – Attorneys at Law can help.
We have been specializing in Bankruptcy Law for over 20 years. Contact us today!