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Julia Kefalinos Julia Kefalinos
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Reasons For Bankruptcy & Explanation Of Discharging Debt

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Many people are facing mountains of debt due to no fault of their own.  If you find yourself in this situation, having all of the facts in front of you as you make decisions ensures the best possible outcomes.  An experienced Miami bankruptcy attorney can help.

Key Reasons People File for Bankruptcy 

Every situation is different, but the path to bankruptcy is often similar:

  • The American Journal of Public Health reports that two-thirds of U.S. bankruptcies were related to unexpected medical issues, frequently compounding matters because breadwinners were unable to work;
  • Job lay-offs, resignations, and terminations led to many Americans’ inability to take care of their debts, particularly during the pandemic;
  • The financial strain of separation or divorce, along with extra legal fees, child support, and the division of assets, plunged many into untenable debt;
  • Unexpected calamities large and small put many over the edge financially. Whether it was a theft, a natural disaster, or a broken pipe, expenses often outpaced earnings;
  • Poor management of bills, including excessive credit card use, lands people in trouble with creditors all the time. Easy credit, pay-day lenders, and high interest rates have led borrowers into serious debt across the country.

Debt Relief 

A Chapter 7 bankruptcy provides relief from personal debt, keeping creditors at bay. These creditors often have the right to seize property in exchange for the debt discharge.  Liquidating the debtor’s possessions is generally accomplished with the assistance of a trustee, who is essentially a short-term owner of the debtor’s estate.  Items the debtor has co-signed on may be included, such as a car that is in a relative’s possession, but which the debtor signed on to.  The trustee will attempt to sell assets in order to make payments to creditors, or creditors  will attempt to repossess the property. If a debtor is particularly wary of parting with, say, a car, it is possible to reaffirm that debt, agreeing to make payments rather than suffer repossession of the vehicle.  Otherwise, debts will be discharged, although certain financial obligations are not included.

Non-dischargeable Debt 

Unfortunately for some, not all debt disappears in a Chapter 7 bankruptcy filing.  Items that cannot be incorporated in the relief include, although are not limited to:

  • Child support and alimony obligations;
  • Student loans;
  • Debts related to willful/malicious injury from a previous lawsuit;
  • Debts related to drunk driving incidents;
  • Restitution obligations related to certain criminal activity;
  • Certain taxes;
  • Debts related to fraudulent activity.

Guiding You Through 

At The Law Office of Julia Kefalinos, bankruptcy is dealt with in a judgment-free atmosphere as attorneys work toward the best possible outcomes for you.  To discuss your options, contact our Miami office for a confidential consultation today.

Resource:

ajph.aphapublications.org/doi/abs/10.2105/AJPH.2018.304901?journalCode=ajph&

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