I have some debt that is around $20,000 and I am getting overwhelmed that I can not pay it and now am being threatened by lawsuit. Does bankruptcy help with this situation or is it a bad idea? Does bankruptcy wipe out the debt or do you still pay a percentage?
Chapter 13 Bankruptcy Attorney
This is an incredibly broad question. Bankruptcy can be an effective tool for stopping a lawsuit. Eligibility for and benefit of a bankruptcy is largely determined by analysis of your debt, income, and equity in property. At an initial consultation with a bankruptcy attorney, you will review your unsecured debts (credit cards, medical bills), secured debts (car payments, mortgages), and priority debts (taxes). You will also review all of the property you own and your income. The attorney will analyze the equity in your property, as well as your income, to determine what, if anything, you'd be required to pay to creditors through your potential bankruptcy. Many debtors are able to discharge ("wipe out") all of their unsecured debts. Others are required to pay up to 100% of their debt to unsecured creditors based on their income or equity in property. Only after an attorney has done a detailed analysis of those facts can you make an informed decision as to whether a bankruptcy would be beneficial. Thankfully, many attorneys offer a free consultation to help answer all of these questions in person. I'm sure that after a meeting with a qualified attorney in your area, your questions will be answered and your mind will be at ease.
Bankruptcy could definitely help, but it would depend on what type of underlying debt the lawsuit is based on. Labeling it good or bad isn't really the ideal question. Meet with an experienced attorney who can describe how bankruptcy would work for you, then you can decide what response is best based on your specific case. It depends on whether you file a chapter 7 or 13 whether you make payments on the debt or not, and whether you would file a chapter 7 or chapter 13 depends on a variety of factors. Again, your best bet is to have a consultation with an experienced attorney who practices bankruptcy to get the answers you need. Most bankruptcy attorneys offer consultations at no charge.
Debt Settlement Attorney
Whether your debt will be discharged in bankruptcy depends on the type of the debt. When you file bankruptcy, your assets are protected by exemptions which vary depending on your situation. If you have unprotected assets, they may be liquidated in a bankruptcy proceeding. You should talk to an attorney in your state to discuss the facts of your case.