[vc_row][vc_column][vc_column_text]Financial problems can surface in unexpected manners, such as the onset of an unexpected global pandemic.  Many businesses were suddenly forced to close, resulting in millions of people losing their jobs in recent months.  Unexpected medical bills, unemployment, missed mortgage or rent payments; the ultimate financial fallout from the novel coronavirus outbreak still remains to be seen.  What has already been seen is that many families are struggling under extensive and unmanageable levels of debt.  There are many legal options for these families to escape that debt. While filing for Chapter 7 bankruptcy is an option, many people want to avoid the negative consequences of such an action.  For people who want to escape their unmanageable debt with relatively few consequences, debt consolidation is a practical option to consider.  Debt consolidation is just what it sounds like: the consolidation, or combining, of all of your smaller debts into one larger debt.  Debt consolidation does not actually erase your debt, leaving some people to wonder why it's worth doing.  Instead, the process allows you to escape your debt by reducing the overall interest levels of your outstanding debt. For example, let's say you have 5 credit cards, each with a current balance of $5,000.  These credit cards all have an annual percentage rate (APR) of 20%.  If you make a $100 payment to each credit card every month, it will take over 9 years to eliminate the balances.  You will have paid $5,840.10 extra for each credit card.  And that's assuming you make no additional charges to any of these cards!  Now, let's say you consolidated this debt into one loan with an APR of 10%.  Instead of five $100 payments, you're now making one $500 payment monthly.  With these terms, it will now take only five years and five months to eliminate your debt, with only $7,474.45 in total interest.  This would save you $21,726 in interest payments alone. Every individual's situation is unique, but the goal of debt consolidation remains the same: reduce the time it takes to pay off your debt and pay less in interest costs.  The terms of debt consolidation loans can vary dramatically based on the level of debt and the applicant's credit history.  That's why it's important to have a dedicated debt consolidation law firm help you throughout the process.  A bankruptcy and debt attorney can tell you if debt consolidation is the best action you can take to escape your debt.  The Law Offices of Scott Warmuth provides free consultations to anyone interested in reducing their debt obligations through consolidation, negotiation, or bankruptcy.  Call us today at 888-517-9888![/vc_column_text][/vc_column][/vc_row]

[vc_row][vc_column][vc_column_text]For most individuals who are severely in debt and considering bankruptcy, there are two options to choose from: Chapter 7 and Chapter 13.  These names refer to their specific place in U.S. legal code, but do have proper names under the law.  Chapter 7 refers to liquidation while Chapter 13 refers to adjustment of debts of an individual with regular income.  More commonly, Chapter 7 bankruptcy is commonly referred to as a "straight bankruptcy" or "liquidation bankruptcy".  Chapter 13 is commonly called the "wage earner's bankruptcy".  The differences between the two types of personal bankruptcy are important for people looking for a fresh financial start. Chapter 7 is the most common type of bankruptcy.  Liquidation bankruptcy does exactly what it says, liquidizing assets and using those funds to repay creditors.  As the goal of bankruptcy is to allow a person in debt to start over with a fresh financial future, several types of assets are considered exempt.  It would defeat the purpose of a bankruptcy if it stopped the person in debt from earning a living, so things such as wages, home equity, cars or trucks, tools of the trade, and more are protected from liquidation.  And even better, most straight bankruptcies resolve without the loss of any assets whatsoever.  However, there are also limitations as to what type of debt can be erased.  Student loans, income taxes, and child support are among the types of debt that will remain after a Chapter 7 bankruptcy, as does the risk of home foreclosure.  People in debt considering a Chapter 7 filing must meet a means test. Chapter 13 is different in that it requires debt repayment, but no assets are at risk.  A wage earner's bankruptcy is, as the name implies, for individuals with a regular income who do not qualify for Chapter 7.  Eligibility for Chapter 13 bankruptcy is determined on the amount of debt an individual has.  If debt levels are beneath the limits, a debt repayment plan is created for the applicant.  In most cases, the person in debt will make payments for three to five years.  Once the repayment plan has finished, the remaining negotiated debts will be discharged.  A Chapter 13 filing will stop any foreclosure proceedings and protect the applicant from foreclosure as long as currently due mortgage payments are made. There are many more subtle differences between these two types of personal bankruptcy.  A bankruptcy attorney can help explain the differences to you and pursue the debt relief option most suitable for your personal financial situation.  The Law Offices of Scott Warmuth provides free consultations to people seeking a new financial path forward.  Call us today at 888-517-9888![/vc_column_text][/vc_column][/vc_row]