Crucial unemployment benefits have ended for many people who sought relief from income losses after the COVID-19 shutdowns this spring. If your benefits are drying up, you may be worrying how to pay your bills.
Bankruptcy is a viable option to unload debt and get back on your feet. Freedom Law, PC, has the expertise and experience to tailor a plan for your specific needs.
In June, Charissa Potts, owner and founder of Freedom Law, joined Melissa Fradenburg, financial advisor in Grosse Pointe with Pearl Planning, to talk about the basics of bankruptcy options during Fradenburg’s weekly podcast, “52 Pearls.” Two pivotal points Potts made: Never take money out of a retirement account to pay creditors; and people don’t have a moral obligation to pay creditors.
“You have a legal obligation to pay your debts. You signed a contract,” Potts said. “You have a moral obligation, on the other hand, to take care of your family, to save for retirement so that you’re not a burden on your children, to take care of yourself. Bankruptcy should be a business financial decision.”
Potts summarized the differences between bankruptcy types with a few key details:
- Chapter 7: Typically a “going out of business sale,” debtors liquidate their assets to pay off debt and unload unsecured debt, such as credit card and medical bills. There are income limitations, and debtors generally don’t have assets to pay back their creditors. Click here for more details.
- Chapter 13: This is a 3- to 5-year debt reorganization that is court ordered. Debts usually include things like mortgages, child support, student loans, and unpaid taxes. Debtors can keep their assets under a Chapter 13. Click here for more details.
- Chapter 11: A rarer option, but a good one when debt limit is an issue. This type of bankruptcy is typically for people with high net worths.
You can listen to the entire podcast “Understanding Bankruptcy with Charissa Potts” here.
Call or text Freedom Law, PC, at (313) 887-0807 to make your appointment, or email us at info@freedomlawpc.com. Initial consultations can be booked at www.calendly.com/flpc
