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Exercising your right to start over: Bankruptcy.

What do you think of, when you think of the Constitution? Freedom of speech? Right to Bear Arms? Unlawful Search and Seizure? None of these are in the Constitution – they were added later, in the Bill of Rights.

Constitution (Article 1, Section 8, Clause 4)

Constitution (Article 1, Section 8, Clause 4)

But you know what IS in the original draft? The right to Bankruptcy. Article I, section 8, Oversight of Bankruptcy is a required duty of Congress. The ability to start over, with a financial clean slate was so important, it was in the original draft – before freedom of speech, before the right to bear arms, before the guarantee of a jury trial, the framers made sure you could declare bankruptcy. Please keep that in mind.

You have a right to get the protection of the court against your creditors. In a lot of situations, you can have your debts eliminated, and you will have an opportunity to renegotiate the repayment, and at least get a break from the harassment. With so much debt collection abuse – why don’t more people take advantage of the Bankruptcy process? Yes, it’s complicated, but not more difficult than most other legal procedures. I think it’s the stigma – the shame of having to surrender, or the feeling that you have failed in your obligation by not repaying the debt.

If you are avoiding the phone because of creditors, you may be able to get some help before the holidays. The process was established in this Nation by the Founders; it is your absolute right. This
process may be the way you can start over, get a grip on your finances, or just give you some room to negotiate. Your creditors know you can get protection from the court, so they aren’t going to make deals with you until you do.

Here’s some insight on Creditors:

  1. High Interest Rates are the reward the lender gets for taking the risk that you will default. If you were guaranteed not to default, your interest rate would be tiny – like the kind of interest you get on a Treasury Note or US Savings Bond. High Interest means that they assume some are going to default, so they are getting their piece with every interest payment.
  2. Your Credit Score is a very complex calculation, and it takes into consideration what kind of debts you have, and what abankruptcy-sign-postssets you have. If you have a lot of debt that can be discharged in a bankruptcy, and you don’t have substantial assets (like a house, or investments), then you are a candidate for an easy Chapter 7 bankruptcy. The system then ASSUMES you are going to file for a Chapter 7, and it’s the reason your score is so low. The credit reporting agency is telling potential lenders that you will likely file, and once you do file, your score will go up.
  3. Bankruptcy will do a lot to protect you, but it’s still going to change your life. If you are still paying on a car loan, you may be able to get out of the loan – but you will likely lose the car. Yes, it gets rid of the debt, but if that debt has collateral, like a lien on the car title, you could lose that asset. There are ways to keep the car – so this isn’t an absolute rule, but you need to know how to keep the asset, and plan for it.
  4. Chapter 7 is a cleaner way to do it, as it will wipe out many different kinds of debt, but you can only do this once every 8 years. So if you declared a chapter 7 a few years ago, and disaster struck again, you can still file for Chapter 13. This is a much more complex process, and it’s going to cost more to do it – but if you have been backed into a corner again, it’s an option you can exercise.
  5. When you file for Bankruptcy, the creditors have to stop their collection efforts, and deal with your attorney.

If you are in the Greater Phoenix area, the Potter Law Firm may be able to help you. “We’ll get you through it.”

“We are a debt relief agency. We help people file for bankruptcy relied under the bankruptcy code.”