Can Outstanding Student Loans Drive Someone To File For Bankruptcy?

Yes.  Just because they are not dischargeable doesn’t mean that they aren’t causing problems with your finances. You can be paying in several hundred or even more dollars a month for a student loan these days, it could even be in the thousands per month. All that money going towards the student loan, if you’re not making enough money, it starts to come from the credit cards or you start to move off with the credit cards because you are spending all the money on the student loan. That’s another big cause as well.

Can A Lawsuit Cause Enough Financial Distress to Consider Bankruptcy?

Yes. With civil judgments, a lot of those are dischargeable. If you have restitution claims from some criminal issue, like, if you caused some property damage or something like that, those aren’t dischargeable. Bankruptcy isn’t going to help you out there but for other things, divorce is a big issue.

When people get divorced, bankruptcy kind of follows that around too because of problems relating to the divorce or from the marriage that they have now been saddled with. Other debt collection lawsuits obviously fall into that but if you have something like a personal injury claim or something that you had against you or some sort of a business claim or something, that can be thousands and thousands of dollars.

I’ve also had clients that have civil debt collection judgments that are from debts that are really old and they kind of forgot about them or didn’t realize they weren’t satisfied and then the interest ran through years and years and sooner or later, the creditor finally files a lawsuit and now you’ve got twenty or thirty or forty thousand dollars of debt for something that was only a few thousand dollars to begin with.

Is Bankruptcy Prevalent Among a Particular Age Group?

I have had bankruptcy clients of all ages and from all different walks of life. It really can happen to anybody. If something that you’re not expecting comes along and knocks you off of your game financially, then something has to be done about it. Sooner or later, if you’re not able to get back on your feet, then you’re going to have to be considering bankruptcy and that has happened to people who have great jobs, who have lost those jobs or older people or younger people, people from all different kinds of walks of life.

Do Car Payments or Credit Cards with High Interest Rates Often Motivate People to File Bankruptcy?

Yes. It’s one of those certain dangers of our society. We live in a place where banks are trying to give you credit and are trying to get you to borrow money and a lot of people just don’t have a clear picture of where they are at with their finances and how much money they really have left over after their needs are met to buy a little more than they can afford..

It might not even be that much more at first, but slowly, over time, you have to start buying some groceries at the end of the month with a credit card instead of using your paycheck and that adds up slowly and you find yourself in that situation. Spending too much money on a car is just like spending too much money on groceries and too much money on your house or anything else. It’s dangerous kind of a game to get yourself into.

How Does An Automatic Stay Benefit A Person Burdened by Credit Card Debt?

The automatic stay is the most powerful part of bankruptcy. It is remarkable from a legal standpoint how much power you have when you put the bankruptcy court behind you because what this does is the moment you file, without a judge looking at it, without anything else happening and immediately, when you file is an automatic stay is released by the court.

What that means is that the stay is a legal term that means you have to pause or you have to stop everything. Everything related to your finances is stayed, it’s paused, it’s stopped. Any lawsuit that anybody has that you are a party to is stopped, any creditor that has a debt that they are trying to collect from you, they can’t ask you for anymore. They won’t even take payments.

Everything stops while the bankruptcy proceeds and the bankruptcy judge essentially decides what’s going to happen with your case. It’s crazy to think that anybody walking a street right now in America has the power to stop any creditor from contacting them immediately just by filing a bankruptcy petition. It doesn’t have to be okayed by a judge, it doesn’t have to go through any process, it just happens as soon as you file it. It is the thing that’s going to give you immediate relief from your financial trouble and it is incredibly powerful.

If bankruptcy is the right option for you, and it’s not right for everybody, it’s not for all situations because it is a drastic measure, but if it is, that is the thing that’s going to really put you back in the driver’s seat of your finances.

For more information on Student Loans and Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (801) 441-2013 today.

By Court Koehler

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