If you’re reading this blog, it’s likely you were kind enough to co-sign on a debt with someone, but that certain someone fell behind on payments. Since they fell behind on their payments, it’s likely the creditor is trying to collect the debt from you. If you’re experiencing this, don’t worry. We can certainly help you.
Quite often we have clients who are being harassed by creditors because they co-signed on a debt with a family member or friend and that person failed to make their payments on time. When this happens, creditors act within their legal rights to try and collect the debt from you. If you’re unable to satisfy the debt, normal collection activities ensue as if you were the beneficiary of the original credit. Ultimately, if the debt is not satisfied, a judgment will likely be entered against you and your wages will be garnished.
Your Options
1. Do Nothing
When faced with a situation such as this, you have a few options. You could choose to do nothing. If you choose to do nothing, you will not be thrown in jail. Your wages will likely be garnished, but the maximum amount that can be garnished at any one time is 25%. Some people accept the fact they are being garnished and continue to allow the garnishment until the debt is satisfied in full. Now, if you’re like most people, allowing 25% of your income to be garnished simply is not an option. And, quite frankly, that’s no way to live.
2. Get A Loan
In some instances, it makes sense to try and get a loan to satisfy the debt. If you choose to go this route, you can satisfy the debt and pay off the new loan according to the repayment schedule. For some people, this is a great option. Just like any loan, of course, there will be interest charged on the loan and the bank will determine what your monthly payment is. If you have the financial means to go this route, it’s not a terrible option. However, if you’re considering bankruptcy, it is likely you’re not in a position to secure a loan, or even pay it back if you could get a loan. With that being said, bankruptcy may be the best option.
3. File Chapter 7 or 13 Bankruptcy
When it comes to consumer bankruptcy, you have two options. You may be eligible for Chapter 7 or Chapter 13 Bankruptcy. Both options are beneficial in providing you with the relief you need from your debts. Depending on your individual situation, one option may be better for you than the other. This is where it’s important to consult a qualified MN Bankruptcy Attorney.
Chapter 7
Chapter 7 bankruptcy is also known as the liquidation bankruptcy. This option allows you to eliminate your debt in about four to six months. It’s referred to as the liquidation bankruptcy because depending on the extent of your assets, you may have to turn over a portion of your assets to a bankruptcy Trustee who in turn pays off some of your debts. Despite this being a liquidation bankruptcy, in most circumstances we can protect your assets. Most people are concerned about their house and their car. Majority of the time we are able to file your bankruptcy and make sure nothing happens to your house or car. If you qualify for a Chapter 7, and you have creditors coming after you for a debt you co-signed, this may be a great option to protect you from future collection action. If you’re interested in this option, reach out to a MN Bankruptcy Attorney and we can discuss what your life looks like after bankruptcy.
Chapter 13
Chapter 13 bankruptcy is an option to break free from your debt while restructuring what you owe. This option is ideal for high wage earners or people that have a lot of assets. When I say a lot of assets I’m referring to boats, motorcycles, real estate, etc. Through a Chapter 13 we create a monthly payment plan to satisfy some or all of your debts. The monthly payment plan we create is NEVER going to be more than you can afford. Your payment plan will be between 36 and 60 months. By filing a Chapter 13 and making monthly payments, you can satisfy your obligations and break free from the unfair collection practices of creditors. Chapter 13 can be beneficial because we can make sure all of your assets are protected. So, if you have a lot of assets you’re worried about losing through bankruptcy, a Chapter 13 bankruptcy may be the best option for you. If you have more questions about how a Chapter 13 works, or if you think it would be a good fit, feel free to reach out to a MN Bankruptcy Attorney.
4. Get A Free Consultation
Whether a Chapter 7 or Chapter 13 bankruptcy better fits your situation depends on a number of things. Our experienced MN Bankruptcy Attorneys can evaluate your situation and help you get your life back. There are pro’s and con’s to filing one chapter of bankruptcy over another, but whichever option fits your situation, you can break free from the overwhelming situation you’re confronted with. We will review your situation and make sure the option that is chosen places you in a better position after filing than you find yourself now.
If creditors are after you for any type of debt, it never hurts to get the qualified opinion of a MN Bankruptcy Attorney. Your initial consultation is FREE and we can help alleviate the concerns you have. Whether the debt is solely yours or the debt is from a co-signor defaulting on their obligations, we can help.
We will help you get your life back! Our MN Bankruptcy Attorneys are dedicated to helping you through the situation you’re in and we truly care about your life after bankruptcy. From the initial consultation to the moment you have your life back, we will be by your side.
