Bankruptcy Puts A Stop To Foreclosure.
Bankruptcy will stop your foreclosure; that’s one of the more popular reasons people file in the first place. When someone files for bankruptcy protection, immediately an “automatic stay” goes into effect, and that prevents creditors from contacting you or attempting to collect any more money from you; it also puts a hold on any lawsuits that are in progress, and since a foreclosure is a lawsuit, that means you will have a chance to work things out, either through the bankruptcy court or via direct negotiation with the mortgage company.
Bankruptcy Stops Vehicle Repossessions.
It’s true; repossession is covered by the automatic stay, as well. When you file the bankruptcy petition, the court will automatically send out a notice to your creditors and places on hold on any type of legal action, including repossession. If they try to repossess your car anyway, you can get it back.
Bankruptcy Helps Eliminate Some Taxes.
Taxes are a little trickier, since some are not dischargeable, meaning you can’t get out of paying them by filing for bankruptcy. However, if you have tax bills from several years ago, they can be dischargeable under the bankruptcy code, which gives you leverage when the IRSA comes to collect; it can bring them to the table to negotiate a settlement and get them to accept less money. With the power of the bankruptcy court behind you, it’s easier to convince them to be more lenient with the settlement.
Bankruptcy Helps Get Rid of Credit Card Debts.
Credit card debt is unsecured debt, which means it’s not backed by any kind of collateral, which makes it different than a car loan or a mortgage, wherein if you don’t pay they can come take your property. When it comes to unsecured debt, there is no recourse for the creditors. Bankruptcy takes care of that unsecured debt by simply wiping it out; it will immediately eliminate credit card debt.
Bankruptcy Helps With Medical Bills.
One of the most common reasons people file for bankruptcy is because of medical bills. Often, people are having a hard time making ends meet and suddenly they are struck ill or injured and they find themselves with crippling medical bills not covered by insurance. Because medical debt is like credit card debt, it is unsecured and dischargeable, so when you file your bankruptcy petition and follow through with everything and complete the bankruptcy properly, your medical debt will be a thing of the past.
Bankruptcy Puts a Halt to Wage Garnishments.
Because of the automatic stay, almost any type of attempt to collect money from you will be stopped immediately, including wage garnishments, which happens when someone wins a judgment against you and is able to take money from every paycheck. As soon as you file bankruptcy, the automatic stay takes effect, the garnishment stops, and any money they take out after that must be returned.
Bankruptcy Puts a Stop to Harassing and Persistent Phone Calls From Creditors.
After you file, the automatic stay means creditors are no longer allowed to contact you; in fact, if they continue, they can get in a lot of trouble. Collectors tend to be pretty good about that because of the severe penalties they can incur if they violate what is essentially a court order, and the calls almost always stop. And it doesn’t just apply to phone calls; it will stop any collection efforts, even by mail or in person, and it takes effect immediately.
Bankruptcy Helps Steer You Away from Fraudulent Debt Negotiation Services.
Over the years, a number of companies have popped up, promising to negotiate your debt, get you on a payment plan and fix all your problems without bankruptcy, and many of these companies are more than a little sketchy, while others are a rip-off and don’t provide a service that actually helps you. Bankruptcy, on the other hand, actually simply eliminates many of the debts these companies are claiming to renegotiate. Every situation is different, but it’s always worthwhile to explore the idea of completely eliminating the debt instead of repaying it through a potentially sketchy company that is purporting to negotiate the settlement for you.
In theory, these companies can renegotiate with your creditors and sort of get lower payments, but in practice, they don’t really have the leverage to that. In my experience, you can call a credit card company yourself and ask to pay a lower amount; sometimes that works and sometimes it doesn’t. If you need some sort of leverage, bankruptcy offers that; it’s sort of the stick behind the carrot of offering a settlement to a credit card company.
Repayment companies take all of your debts and put them in one basket and have you pay interest to them. It’s really difficult for the average consumer to tell whether you are getting a better deal or they’re just taking your money to pay your debts and scraping off a percentage for themselves on top of that.
Bankruptcy Helps Stabilize Your Finances.
Filing for bankruptcy puts everything on hold; you won’t have to make payments on anything while the bankruptcy process is going on, at least with Chapter 7. Under Chapter 13, things are a bit more complicated but the bottom line is, it puts everything on pause, so you can get back on top of your finances. You don’t have monthly payments to make and you’re no longer falling farther behind, so you can re-organize yourself and give a fresh start.
Bankruptcy Gives You a Second Chance in Life and an Opportunity to Start Afresh.
Bankruptcy is the only way available to completely clear your debts and get a fresh start. You could negotiate with creditors individually and possibly get them to settle for a lower amount or something like that, but those negative items stay on your credit report and impact your score for a long time. If you file bankruptcy, while it does stay on your credit report for a long time, but the other delinquent accounts go away and you can begin to rebuild your credit immediately.
In many cases, it actually serves as a faster way to improve your credit score and, once it’s over, you have a clean slate, since your personal debts are wiped clean. Since you don’t have anything left, it is the only way to do that. There’s no other tool available that will get you a similar result.
For more information on Top 10 Benefits of Bankruptcy, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (801) 441-2013 today.