Every day we receive calls from people asking “what happens if I declare bankruptcy?” We usually tell people that declaring bankruptcy could be the best strategy for getting rid of debt and immediately improving a very difficult situation.
In general, there are MANY benefits and MANY good things that happen when a person files bankruptcy. To name a few:
- chapter 7 bankruptcy wipes out credit card debt
- chapter 7 bankruptcy wipes out medical debt
- chapter 7 bankruptcy eliminates personal loans [including payday loans]
- chapter 7 bankruptcy stops wage garnishment
- chapter 7 bankruptcy stops judgments
- chapter 7 bankruptcy stops debt collection and all harassment
- chapter 7 bankruptcy can get rid of old IRS debt
- chapter 7 bankruptcy can get rid of lien deficiencies
- chapter 13 bankruptcy stops foreclosure and gives a homeowner time to catch up on missed mortgage payments
- chapter 13 bankruptcy can get rid of 2nd mortgage liens when a 1st mortgage is underwater
Declaring bankruptcy can be a very good strategy for a person or for a business to stop collections, get rid of excessive debt, and provide the opportunity to get a fresh start and rebuild credit.
If you are facing overwhelming debt and need IMMEDIATE RELIEF, talk to our bankruptcy attorneys TODAY
Consumer Action Law Group handled my Bankruptcy and they were fantastic. All the way to the end they were very patient and understanding and did their utmost to see that I was fully taken care of. I would recommend them to all my friends
What Happens In Bankruptcies?
What happens in bankruptcies depends on the person and the finances at the time of filing. As a general rule, when a person files bankruptcy, they are able to keep their home, vehicle, and personal belongings, along with some savings [in most states].
In general, bankruptcy is a strategy for debt elimination and a way to rebuild credit. As soon as a bankruptcy is filed, ALL COLLECTION activities must immediately stop. That includes any foreclosure activity, repossessions, wage garnishment, and enforcement of judgments.
People often ask us if there are any negative consequences of filing for bankruptcy. As a rule, bankruptcy will remain on a person’s credit report for 7 years. However, a person will be still able to qualify for loans and credit cards after filing bankruptcy; frequently within 6-12 months.
Bankruptcy does not prevent a person from getting new home loans or car loans. In many cases, filing bankruptcy can actually boost a person’s credit score. This makes sense because a person can only file bankruptcy once every 7 years. After a person files bankruptcy, creditors see them as good candidates for rebuilding credit and repaying loans.
When To Declare Bankruptcy
When to declare bankruptcy depends on the circumstances and the specific timing for a person [or a company]. If you think about the most common examples of companies filing, there is typically an event or a lawsuit that causes a company to file bankruptcy.
One recent example is the many lawsuits brought against the Boy Scouts organization causing them to declare bankruptcy. For most people, bankruptcy is the best option after a hospital stay leads to debt that cannot be repaid. The same is true after a job loss or an illness that leads to high credit card bills.
From a timing standpoint, it makes sense to wait for the worst to be over before filing bankruptcy. For example, for a person that had to go to the hospital and later ends up with a pile of medical bills, it’s best to wait for the last medical bill to arrive before filing.
Sometimes it is impossible to wait out the pressure from the collection calls. It is VERY stressful to have people calling all the time and making harassing comments or threats about pending legal action or intimidating steps like foreclosure or repossession of vehicles. Bankruptcy stops the calls and relieves the pressure when it gets to be too much for a person to handle.
When to File Chapter 7 Bankruptcy
We advise our clients to file Chapter 7 bankruptcy when the pressure of debt is too much to bear. The stress of collection calls and the worry of having to pay back credit card and medical bills can be overwhelming for most people. In many cases, the pandemic caused job loss and illness that required extraordinary credit card debt just to survive.
All too often, credit card debt cannot be paid back or paid down in a reasonable time frame. When a person realizes that the bills are mounting and there is no way to catch up, it’s probably a good time to call and talk to a lawyer about options for filing Chapter 7 bankruptcy.
If you are facing overwhelming debt and you need immediate relief, call and talk to a Chapter 7 bankruptcy lawyer today.
When to File Chapter 13 Bankruptcy
We advise our clients to file Chapter 13 bankruptcy when they have fallen behind on mortgage and/or car payments and they are facing foreclosure or repossession of their vehicles. Chapter 13 immediately stops any active foreclosure or repossession activity. The moment a Chapter 13 bankruptcy is filed, all collection activity must stop. Chapter 13 bankruptcy also eliminates credit card and medical debt, similar to a chapter 7 bankruptcy filing.
It makes sense to file Chapter 13 bankruptcy once a person has gotten back on their feet after losing a job or going through an illness and they need to catch up on missed mortgage or car payments in a payment plan. Chapter 13 provides a court-ordered payment plan that allows a person up to 5 years to repay missed mortgage or car payments.
If you are facing foreclosure or repossession of your vehicles or overwhelming debt and you need immediate relief, call and talk to a Chapter 13 bankruptcy lawyer today.