Besides the obvious of getting your qualifying debt wiped away without having to make any more payments, there are several other possible advantages of filing bankruptcy.
When you file for bankruptcy, you will immediately get an automatic stay. The automatic stay stops all creditors actions against you to collect on your debt. This includes phone calls, letters, and texts.
The automatic stay also stops wage garnishments, foreclosures, evictions, utility shut-offs, and repossessions. If your creditor wants to take any further action against you, they will have to get permission from the bankruptcy court. This permission is rarely if ever granted.
If the creditor takes action without court permission, they can be held in violation, and they may have to pay your attorney fees and monetary damages.
If you have debt with collateral, and you want to keep the property such as a home or car, you will have to continue to make those payments if you want to keep the items. One of the bankruptcy benefits is you can redeem your property. For example, you can pay what your car is worth instead of the loan value. So you could pay off a $5,000 car loan for $2,000 if that is what the car is worth.
If you file Chapter 13 bankruptcy, you pay the past payments often at a lower monthly payment until you catch up during the three to five years your bankruptcy is in process.
When you file bankruptcy, and you have a legal judgment against you on a debt, if that debt is unsecured (as in not attached to your home or vehicle), the debt can be eliminated and it as if the judgment never existed.
If the judgment does have a lien on your property, you can ask the bankruptcy judge to remove the lien if it affects the exempt property.
Most Debts Discharged
Eliminating your obligation to pay on debt is the most significant advantage for filing bankruptcy. Qualifying debt is usually medical bills, credit cards, payday loans, and some older tax debt.
Secured debt, loans that have collateral, can be seized after your bankruptcy and sold by the lenders if you do not pay on that debt.
If you would like to find out what bankruptcy can do for you, please contact a Plano bankruptcy attorney to discuss your unique financial situation.