A Bankruptcy Lawyer’s Blog

What Are the Positive Benefits of Bankruptcy?

While bankruptcy carries a nasty cultural stigma with it, it may be a very positive choice for a number of indebted individuals to help them lighten their financial burden. Here is a list of the possible benefits that bankruptcy can bring:

1. Allows for the discharge of most, if not all of your debts. This means that you are no longer legally obligated to pay the debts.

2. Prevents property from being repossessed, or it may require creditors to return property that was repossessed.

3. Stops the collection process. This means that creditors must stop attempting to collect on the debts.

4. Prevents you from having your utilities cut off, or if they are cut off, requires the utility company to restore service.

5. Stops/Prevents wage garnishment.

6. Halts the foreclosure process and gives you time to catch up on payments. This means you will not necessarily lose your house or mobile home.

7. Gives you the opportunity to dispute false claims from creditors who may be trying to collect more than what it owed to them.

While bankruptcy will allow for the discharge of a number of debts, others remain non-dischargeable according to federal regulation. Non-dischargeable debts include family support, student loans, certain types of taxes, and criminal fines. Liens, mortgages, and other secured debts will also survive bankruptcy procedures seeing as how they are secured by either some sort of collateral or by the federal government.

Additionally, it is important to remember that Chapter 7 bankruptcy does not relieve a co-signer from any responsibility that he or she might have. The creditor has the right to enforce the co-signers obligation. Chapter 13, on the other hand, will protect a co-signer as long as the debtor complies with his or her bankruptcy plan.

If you are seriously considering bankruptcy, please take the time to speak with a financial expert. He or she may be able to help you understand your option more completely and help you avoid making a mistake you might later regret.