the legal obligation to pay many of your debts.
This process of wiping the
slate clean is called a discharge of debts. The goal of a discharge is to reduce
debt to give you a fresh start.
Whether it is through straight bankruptcy (Chapter
7 Bankruptcy) or through reorganization (Chapter 13 Bankruptcy), most or all of
your debts can be cleared.
2. Stop foreclosure on you house and allow you
to effectively make payments to catch up on missed payments of your mortgage.
your home is in foreclosure, Chapter 13 Bankruptcy will stop the foreclosure any
time prior to the sale. Bankruptcy does not eliminate mortgages on your property
without payment. Rather, bankruptcy will structure a plan in order to repay your
mortgage arrears (the amount that you are behind).
3. Prevent your
car or other property from being repossessed.
Even if the creditor has repossessed
your car, filing bankruptcy can effectively force them to return your car or other
personal property (if the bankruptcy is filed quickly enough). The past payments
you have missed will be consolidated into your Chapter 13 Bankruptcy plan. After
this you will no longer pay the finance company, rather you will make monthly
payments to the trustee of your Chapter 13 Bankruptcy who will then pay the finance
4. Reduce or even eliminate high medical bills.
an unfortunate accident or major recently discovered illness can completely ruin
a family. Many families have to make choices on allocation of bills. Often, bills
that were once important become insignificant to the large medical bills acquired
by a loved one. Filing Chapter 7 Bankruptcy can greatly reduce the amount of medical
5. Recent loss of employment.
Studies show that loss of work
is one of the most common reasons people file for bankruptcy. This is very easy
to see. A family can get comfortable on two maybe even one salary. They can take
on regular amount of debts, join clubs, and pay normal bills with relative ease.
All of a sudden one or both spouses lose a job and a family must go from two salaries
to one. Losing a job is closely tied to high medical bills. Losing a job means
this family may be left without the protection of insurance that was once provided
by their employer. Often times these two factors combined create an almost impossible
mountain to climb without the help of bankruptcy.
6. Stop harassing behavior
Some creditors do not always take the right course of action
when attempting to collect a debt. Often, creditors will persistently call the
home of a particular debtor with demeaning and abusive behavior. Not only is this
unethical it can rise to the level of unlawful. In essence, bankruptcy will put
on hold the demands of many creditors and stop the harassing phone calls and other
inappropriate behavior all together.
7. Restore or prevent your utilities
from being shut off.
As you have probably seen many of these reasons overlap.
Some lead to another. If your home is in risk of foreclosure then your utility
bill may also be in risk of being terminated. Filing bankruptcy can prevent the
utility company from leaving you in the dark.
8. Provide help for large
amounts of student loan debt.
While it is true that your student loans will
not be eliminated like several other types of unsecured debt, bankruptcy can consolidate
your student loan debt. This consolidation will allow a debtor to make monthly
payments through Chapter 13 Bankruptcy that are within the financial ability of
9. End wage garnishments.
Chapter 7 Bankruptcy will stop
wage garnishment. Wage garnishment basically takes away your weekly earnings often
times leaving you without necessities. Chapter 7 Bankruptcy allows you to purchase
necessities for you and your family. Chapter 13 Bankruptcy will also help in this
10. Challenge certain claims of fraudulent creditors.
will allow you to challenge these claims from creditors who are trying to collect
more money from you than you really owe. An attorney can provide the support and
the backing you will need to step up to these creditors. Attorneys often even
the playing field between a big creditor and a single debtor. Filing bankruptcy
with an attorney can stop fraudulent reporting by a creditor.
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