Bankruptcy has a bad reputation in our culture but the truth of the matter is that, for many people, it is absolutely the best option to escape the stress of insurmountable debt and to gain a fresh financial start. Here is a list of some potential benefits to filing for bankruptcy protection:
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End those harassing phone calls and letters from debt collectors during the bankruptcy process and, for those debts that are discharged, for good! Creditors and debt collectors must stop contacting you for the duration of your bankruptcy case.
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Stop repossession of your property and force creditors to return property that was already repossessed.
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Halt wage garnishment during the bankruptcy process.
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Put an end to the foreclosure process and give yourself time to catch up on payments. Just knowing that you won’t immediately lose your home can benefit you in so many ways.
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“Strip down” your second mortgage to reduce overall house payment. If the home’s value is less than or equal to what is owed on the first mortgage, Chapter 13 can be used to change the second, third etc. mortgage(s) into unsecured debt which doesn’t necessarily have to be paid in full, thereby reducing the overall house payment. Legislation is being considered right now, that may allow certain filers to “strip” the home down to its actual value which crams down both mortgages.
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Dispute any claims from creditors that you believe are false or inflated to gain more from you than what they are owed.
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Prevent your utilities from being cut off or, if they are cut off, require the utility company to restore service.
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In a Chapter 13 bankruptcy, you may repay past-due taxes, alimony, child support, mortgage and car payments over a period of 3-5 years.
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Possibly the most important benefit of bankruptcy is the allowance for the discharge, or forgiveness, of most, if not all, of your debts. Once you receive a bankruptcy discharge, you are no longer legally obligated to pay off those forgiven debts.
If you are seriously considering filing for bankruptcy protection, you may wish to consult a reputable and experienced bankruptcy attorney who can help guide you through the confusing and complicated process. Having an attorney on your side can provide you with the peace of mind that comes from knowing all your bankruptcy bases are covered.
Randy M. Creighton, Esq.
