Being in debt is a stressful situation, especially for those who have encountered financial difficulties that have affected their ability to pay what is owed while covering other ongoing expenses. If you are in this situation, you may be dealing with constant calls, letters, and threats from creditors and collection agencies, and you may feel helpless and overwhelmed as you attempt to deal with your financial issues and address your family's needs. Fortunately, there are legal measures you can take to stop creditor harassment, and in some cases, filing for bankruptcy may allow you to eliminate some or all of your debts.

Your Rights Under the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates how creditors can contact and communicate with debtors. Under this law, you are protected from harassment by creditors, and you can take steps to address any harassing behavior. The FDCPA allows you to:

• Address abusive practices - Creditors are not allowed to use abusive language, call you repeatedly in an annoying manner, make threats of violence, or speak to you without identifying themselves as debt collectors. If creditors take an aggressive or abusive approach when attempting to collect debts, you can file a complaint against them with the Consumer Financial Protection Bureau (CFPB).

  ...

If you are like many people considering bankruptcy, the idea of losing your home is a major concern. While bankruptcy will allow you to eliminate some of your debts, the discharge of your home mortgage will allow the lender to foreclose on your home. You may be able to avoid this in certain situations, but if you also have a second mortgage on your home, you may be wondering how that debt will be treated in a potential bankruptcy case. The good news is that second mortgages can sometimes be eliminated or reduced through bankruptcy, depending on your individual circumstances and the type of bankruptcy you file.

Mortgage Loans in Chapter 7 Vs. Chapter 13 Bankruptcy

In a Chapter 7 bankruptcy, your first and second mortgages may be discharged entirely along with any other debts you owe. However, as mentioned, above, the lender or lenders may then pursue a foreclosure. Because of this, Chapter 7 is usually only an option if you do not plan to stay in your home.

In a Chapter 13 bankruptcy, your debts will be restructured, and you will be required to repay a portion of what is owed over a three-to-five-year period. If you choose not to discharge your mortgage debts, you can use this repayment plan to pay back missed payments and any applicable fees over time. This will allow you to become current on your mortgage loans and avoid the loss of your home.

There are many situations where individuals who are in financial distress will need to seek relief from their debts and receive a fresh financial start. This can be done by filing for bankruptcy. However, not all bankruptcy filings automatically lead to successful debt relief. A bankruptcy case can be dismissed if the debtor fails to comply with certain requirements or if the court determines that bankruptcy relief is not the right solution for the debtor's financial situation. By understanding the reasons why a bankruptcy case can be dismissed, debtors can prepare to complete the process successfully. These reasons may include:

Non-Compliance with Filing Requirements

To file for bankruptcy, the debtor must complete and submit a number of forms and provide supporting financial documents. Failure to file all required forms and documents in a timely and accurate fashion may result in the dismissal of the bankruptcy case. Additionally, if the debtor fails to attend the mandatory meeting of creditors (known as the "341 meeting"), the court may dismiss the case.

Failure to Comply with Court Orders or Requirements

In some cases, the court may issue orders to the debtor to complete certain tasks or provide additional documentation as part of the bankruptcy case. If the debtor fails to comply with these court orders, the case may be dismissed. Failing to complete the required credit counseling courses may also result in the dismissal of a bankruptcy case. The debtor must take any court orders seriously and respond promptly and accurately.

Filing for bankruptcy can be a difficult decision. Acknowledging that your debt has gotten out of control and that you need help to get your finances back on track is not always easy. However, bankruptcy can provide you with a truly fresh start. Eliminating your debts, including large credit card bills, medical bills, or other debts that have stacked up because of issues such as the loss of a job, can take away a huge burden and ensure that your family will be able to avoid serious financial problems in the years to come. Part of the fresh start following bankruptcy involves rebuilding your credit, which will help you qualify for loans or other benefits in the future. As you plan for your life after bankruptcy, there are steps you can take to improve your credit score.

Pay Your Bills On Time

One of the most important things you can do to rebuild your credit is to pay all of your bills before the monthly due date. In addition to making monthly payments on any loans you kept following your bankruptcy, such as a home mortgage or auto loan, you may want to set up reminders or automatic payments for other bills, such as utilities. Making prompt payments on a regular basis will show creditors that they can trust you and that you are responsible with money management—two qualities they look for when considering whether or not someone should receive loan approval. On the other hand, any late payments may cause your credit score to decrease further, affecting your ability to build your credit back up.

Get a Secured Credit Card

You may be hesitant to apply for a new credit card after filing for bankruptcy, since you will want to avoid racking up new debts that could cause future difficulties. However, credit cards can actually be beneficial in the long run if used responsibly. If you are unable to receive approval for a regular credit card because of the bankruptcy on your record, you may be able to receive a secured credit card. With this type of card, you must make an upfront deposit that serves as collateral for any purchases made with the card.

With the rising cost of living and high levels of consumer debt, bankruptcy is becoming a more popular option for Americans who are struggling to make ends meet. However, there are still many misunderstandings related to bankruptcy laws and procedures that can lead people to jump to conclusions and make uninformed decisions. In situations involving large debts, you will want to understand your rights and options, and with the help of an experienced bankruptcy attorney, you can take steps to avoid further problems and regain financial stability. Here are some common bankruptcy-related myths and the truth about how issues related to debt may be handled before, during, and after the bankruptcy process:

Myth 1: Bankruptcy Is a Sign of Failure

The truth is that receiving debt relief through bankruptcy is not an indication that you are irresponsible with your finances or that you have failed to properly account for your income, assets, and debts. Most people who pursue bankruptcy do so because of financial issues they have encountered through no fault of their own, such as unexpected medical bills or debts that occurred due to the loss of a job. Bankruptcy offers you the opportunity to get back on track financially. It provides relief from debts you cannot pay and gives you the chance to start fresh. With careful planning, it can be an effective tool in your overall financial strategy and provide much-needed relief in difficult times.

Myth 2: All of My Assets Will Be Taken Away if I File for Bankruptcy

You may be concerned that you will have to turn over money you have saved or other property you own when you file for bankruptcy. However, depending on the specifics of your case, including the type of bankruptcy protection you are seeking, you may be able to keep most or all of your assets. While a Chapter 7 bankruptcy is known as a "liquidation" bankruptcy in which some of a debtor's assets may be turned over and sold to repay debts to creditors, you can make use of exemptions to keep certain types of property. Many Chapter 7 cases are "no-asset" bankruptcies that will allow a person to exempt all of the assets they own. In a Chapter 13 bankruptcy, also known as a "reorganization" bankruptcy, you will usually be able to avoid the loss of any assets as long as you complete a three-to-five-year repayment plan.