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Which type of bankruptcy should you file?

It's easy to feel frustrated when you can no longer manage to pay your bills every month. But you should be aware that there is a way out of debt.

Bankruptcy is viewed by some as a negative experience that indicates that you failed. The truth is that bankruptcy is simply a legal method of protecting yourself from overwhelming debt. It's a way to help you overcome your losses and to get a fresh financial start.

Dwindling demand for coal sets foundation for bankruptcy

While there are several notable financial missteps that companies in New Jersey can make that ultimately require them to file for bankruptcy, there are other reasons why unsettling financial problems may occur that are sometimes out of their control. The ebbs and flows of supply and demand and the health of the economy are two factors that could contribute to a company's financial demise even if they have made valuable efforts to secure their assets. 

This is the case for Murray Energy which has long been admired as the largest private coal miner in the nation, but who is now facing bankruptcy with the decreased demand for coal. Though there are negotiations in place to allow the coal giant to receive financial support as it restructures agreements with its lenders, there is evidence of financial problems throughout the company. Lenders have not been paid on time and the company has been unable to pay some of its bills. 

How long does foreclosure take?

When homeowners can no longer make mortgage payments, foreclosure is a very real possibility. The entire process can take a bit of time to conclude, which provides the homeowners with many opportunities to catch up on missed payments and retain ownership of the property. The Balance explains what you can expect from the foreclosure process and what you can do to stop it. 

While you'll be notified by your lender immediately after the first missed payment, you won't be considered in default until you're three months behind on your mortgage payments. When receiving any notices, be sure to read them carefully so you know just what's being requested of you. It may be possible to work out a plan with your lender, provided you act quickly enough. You may also be able to take steps to refinance the home, which might make your mortgage payments easier to manage. If you don't take the proper steps, the lender will move forward with the foreclosure.

Forever 21 offers harsh lessons to retailers

In its heyday, fashion retailer Forever 21 earned a whopping $4.4 billion and made its founders rich beyond their wildest dreams. However, poor expansion decisions and a declining retail climate have resulted in the store filing for bankruptcy. Business Insider explains the factors that led to its decline and what this says to other brick and mortar retailers. 

At the outset, Forever 21's aggressive expansion strategies seemed to work well. With just $11,000 in savings, founders Jin Sook and Do Won Chang opened the flagship Forever 21 store, then called Fashion 21. In the first year, the store made $700,000 in revenue. Every 6 months a new store was opened, which greatly increased the retailer's reach. At one point, Forever 21 had 480 locations in malls throughout America. That same year, the Changs' net worth expanded to $5.9 billion, ranking them among the wealthiest couples in America. 

What is debt settlement?

Because a lot of myths surround bankruptcy, many people are reluctant to file even when it's in their best interest. While alternative solutions like debt settlement are touted as better than bankruptcy, they actually have quite a few downsides. The Balance explains this process so you can make an informed decision about your finances. 

Debt settlement companies claim to be masters at negotiation. When you sign up for services, you provide information on your debt and creditors and they work on your behalf to get it lowered. They may also ask you to stop paying creditors at the present time and instead remit payment to them. The goal is to effectively negotiate with your creditors so the accept the new low figure, which means you'll make smaller payments and owe less money overall. 

How can I avoid common foreclosure scams?

People will do just about anything to avoid their home being foreclosed upon. This leaves them vulnerable to common foreclosure scams, which prey upon a person's fervent desire to retain their home. Foreclosure scams come in all shapes and sizes, which makes it difficult for homeowners to identify them when they lack the proper information. PennyMac explains a few of the more common scams and how they work so you can be sure to avoid them. 

In some cases, you'll be offered a new mortgage loan with a lower interest rate to take the place of your current one. You'll be asked to fill out paperwork which is claimed to be for the new loan. However, this paperwork is actually being used to transfer the deed for your home to the other person. Once they have ownership, you'll be evicted and the home will be in their possession. Additionally, you'll still be obligated to pay back your existing mortgage loan, leaving you even more at odds financially than when you began.

With Chapter 13 bankruptcy, your assets can be protected

You may not like the idea of going through a Chapter 7 bankruptcy, because it would potentially require you to turn over assets you've accumulated over time. You might not qualify for Chapter 7 based on your income or other circumstances. Instead, you may be hoping that a Chapter 13 bankruptcy will work for you.

With a Chapter 13 bankruptcy, you make payments over time. Usually, you'll make payments for three to five years. After you meet the requirements of the bankruptcy, any remaining debts included in the bankruptcy are discharged.

What are business divestitures?

If there is a certain aspect of a business that isn't performing as well as others, many business owners choose to invest more time and money into it to improve its performance. This isn't always the best strategy, however, as the increased concentration may put other, more successful aspects in jeopardy. In this case, a business divestiture is a group of strategies that allows you to rid yourself of underwhelming assets in an attempt to make the rest of your business stronger. The Balance explains different types of business divestitures and how they work. 

Filing for bankruptcy is a common type of business divestiture. Certain types of bankruptcy entail the liquidation of assets to settle outstanding debt to creditors. While not all types of bankruptcy involve liquidation, Chapter 7 proceedings would require you sell off things like property or equipment. Although Chapter 11 aims to reorganize debt, in some cases it also involves liquidation. 

Tips to avoid foreclosure

Homeownership is part of the American Dream for many New Jersey residents. That dream is often threatened when making mortgage payments is no longer possible. If you are struggling with making the monthly amount, you may believe a short sale or bankruptcy are your only options. At William H. Oliver, Jr. & Associates, we often help clients keep their home out of foreclosure.

For at-risk homeowners with subprime adjustable-rate mortgages, interest rates may reset to significantly higher percentages soon. Americans who took out non-traditional mortgages may also have a rough road ahead. According to FindLaw, there are steps you can take to avoid foreclosure and keep your house.

Fighting the stigma surrounding bankruptcy

There are many reasons why filing for bankruptcy can be a difficult decision to make, whether one is worried about various legal stressors or the different ways in which a bankruptcy filing may affect their lives. However, some people push off the bankruptcy process (or avoid it altogether) because they are concerned about the stigma surrounding bankruptcy. However, you should not allow these concerns to get in the way of what is best for you, financially and in other aspects of your life. Filing for bankruptcy has helped many people who were buried in debt and unable to have hope with respect to their financial future.

First of all, many people are surprised to find out just how common bankruptcy is. Not only do many businesses file for bankruptcy, but personal bankruptcy occurs quite often as well. There are a lot of reasons why people may need to file for bankruptcy, whether they lost their job unexpectedly or their credit card debt ballooned out of control as a result of interest and unexpected life challenges, such as a health crisis. Some people feel ashamed of their financial state, but financial problems have become increasingly prevalent in recent years due to wage stagnation, the recession and a host of other factors.

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With offices in Toms River and Neptune, attorney William H. Oliver is ready to answer your questions and help you find the right debt relief solution. Evening and Saturday appointments are available. Call local: 732-988-1500 or fill out our contact form.

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