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What is the right time to file for bankruptcy?

Bankruptcy is the legal lifeline for individuals drowning in the ocean of debt. Businesses and consumers petition courts to relieve them from financial liabilities. In most cases, the petition gets granted.

Definition of bankruptcy

Bankruptcy happens to be a court proceeding wherein the court trustee and a judge analyze the liabilities and assets of people, businesses and partnerships whose financial liabilities have turned to be extremely overwhelming they never believe that they could ever pay it back.

The court has been bestowed with the power to decide if to eliminate the financial liabilities, meaning individuals who owe, will no longer be required (legally) to repay. The court has the power to also lay off the case if it believes that the business or individual has sufficient assets to repay their financial liabilities.

Bankruptcy laws have been written to ensure that people have an opportunity to start fresh when their financial condition has collapsed already. Whether the financial downfall is the result of a bad decision or bad luck, the court will see that a second chance is key alternative in a capitalist economy.

The good news for an individual hesitant about considering the options is that almost everyone who has filed for bankruptcy gets offered a second chance for sure.

Who declares bankruptcy?

Most people and businesses who file for bankruptcy already carry far higher debts than savings to make them up, and never see that changing anytime sooner. In 2021 and 2022, bankruptcy filers owed over $86 and owned assets of $56 billion. A majority of these assets were real estate holdings with debatable value.

On the contrary, bankruptcy could also act as a solid financial planning tool when you’ll have the necessary amount of money to pay back your debts, however will need to rearrange the terms. It’s pretty much often in bankruptcy cases when filers want to pay off taxes or mortgage arrears in a structured repayment plan.

What’s more astonishing is that people – no business entities – are amongst the ones filing for bankruptcy more. Individuals owe money for mortgages, student loan, auto loan, credit card bill – probably all four, and they do not have the income flow to pay back all of them.

So, if you believe your situation is similar as this, consult one of our experienced bankruptcy attorneys

 at Recovery Law Group. Call on: +1 888-297-6203

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Location: Los Angeles, CA, USA

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