Filing Bankruptcy Even Though You Are Judgment Proof

With 2011 approaching quickly, experts are predicting that there will be a high number of consumers filing for bankruptcy. The largest number of these will be filing Chapter 7 to eliminate their credit card debt, that was accumulated over the past year. One of the main reasons that individuals choose Chapter 7 over Chapter 13 is there is much less stress involved. With a Chapter 13, debtors will need to be responsible paying off the debt with a 3 to 5 year payment plan. Unlike a Chapter 7 that's over in 3 to 5 months, and the debtor gets to wipe out all their unsecured debt with minimal hassles. Many Chapter 7 bankruptcy filers are able to reestablish their credit within a few years. Considering all the debt that is wiped out, this isn't so bad. When all the consumers debt is removed, the debt ratios are improved, allowing the consumer to rebuild trust with the creditors.

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Most people that file for bankruptcy are surprised to learn that their property is protected under the state exemption laws. It's important for a debtor to be very careful to protect themselves from creditors. If an individual isn't careful, the creditor can get a judgment against the debtor prior to filing bankruptcy. Once the creditor gets a judgment, they will be able to lien property if the debtor has any. This can be a problem even in a bankruptcy. If the debtor is being sued by a creditor, and has no way to pay them, filing bankruptcy might be a solution to stop the court proceeding. This will wipe out the debt and eliminate any possible chance of judgments or liens against any property. A judgment can stay alive for up to 20 years, and a creditor might just wait until the debtor accumulates something of value and then go after it. The more time that passes, the risk increases for the debtor, that a creditor will eventually find some kind of property that they will be able to take to satisfy their debt. Filing bankruptcy will stop the rights of a creditor to pursue a debtor to pay back in the future. Filing for bankruptcy will not only protect your assets today, but it will protect your assets is the future.

If you're considering bankruptcy, and your only income is Social Security, don't jump in too quickly because you might be considered judgment proof. Basically, this means that creditors can sue you and obtain a judgment, but they may not be able to ever collect anything from you. Creditors cannot attach any money from Social Security income. In fact, most pensions are protected from creditors trying to attach or take them. However, if a debtor owns any real estate or valuable personal property that a creditor could attach through a judgment, and try and sell it to recover the amount owed to them, many times with interest and legal fees added. It's best to evaluate your situation with the bankruptcy attorney to make sure that you protect your property.

After speaking with a bankruptcy attorney, in individual may decide that it's best to file for bankruptcy even though they are judgment proof. The next decision that should be made with your bankruptcy attorney is whether to file Chapter 7 or Chapter 13 bankruptcy. If you have secured debt that you want to protect and are behind on the payments, a Chapter 13 bankruptcy could give you the ability to get your payments caught up, while still eliminating unsecured debts like credit cards. Some individuals that are receiving Social Security might want to file bankruptcy even though they are judgment proof. Even though they're on a fixed income, creditors become very aggressive trying to collect. Filing for bankruptcy will stop all collection efforts and get the creditors off your back.

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