The Benefits of Filing for Bankruptcy
Filing for bankruptcy can help many people in financial distress. Here are some of the benefits of filing for bankruptcy.
Discharge Most Debts
The bankruptcy discharge eliminates any personal obligation to pay certain types of debt. There are several types of debt that can not be discharged through bankruptcy (nondischargeable debt). For most people in debt, bankruptcy is a relatively quick and easy way to end the creditor harassment, financial hardship, anxiety and marital stress typically associated with financial burdens.
Protection of Property and Income
Bankruptcy is often the only sure way to protect your property from unsecured creditors (those who do not have a lien on your property as collateral at usually at the time of the transaction). Bankruptcy may provide protection for your home, car or other vital property. Bankruptcy can also prevent any garnishment of wages or other income after the petition is filed.
Tools for Eliminating or Modifying Secured Debts
By itself, a discharge during bankruptcy does not eliminate the liens on your property that secured creditors have obtained before bankruptcy. However, other provisions in the Bankruptcy Code do give you options to deal with most secured creditors. Many types of liens can be eliminated or reduced because they either impair exemptions or because they are on property that is worth less than the liens. Often there are aspects of bankruptcy that can provide you with the option to retain your home, car and/or furniture.
The stay is an automatic court order that prohibits all sorts of collection attempts by creditors. The automatic stay provides the bankruptcy to proceed in an organized and orderly fashion. It forces an instantaneous halt of most creditor actions against you such as but not limited to repossessions, wage garnishments or attachments, utility shutoffs, foreclosures and evictions. Many of items can then be permanently prevented. The stay is also an effective way to end creditor collection efforts. Creditors that violate the stay risk contempt of court, money damages as well as attorneys’ fees.
Bankruptcy may offer the only possible way for an individual to keep or regain their driver’s license that is subject to revocation due to unpaid debt related to a motor vehicle accident. In some cases, bankruptcy can prevent incarceration for failure to pay support obligations. The bankruptcy code can even protect you from discriminatory actions by government bodies or private employers based on unpaid debts discharged in bankruptcy.