MenuWhy File Bankruptcy?
An Overview of the Debt-fighting Tools of Bankruptcy
Bankruptcy provides a powerful set of tools to resolve debt problems for individuals and businesses. Unlike the various voluntary debt settlement programs advertised on late night television, bankruptcy is backed by federal laws and enforced by orders of federal bankruptcy courts. A debtor complying with the requirements of the law is entitled to certain relief, and in many cases creditors are forced to comply or have limited options of what they may do.
We have assembled several pages explaining reasons why people seek bankruptcy protection. If one of these problems sounds like an issue you are experiencing, contact us today for a free consultation. We provide a frank assessment, and will not recommend bankruptcy if other options are likely to achieve your debt relief goals.
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Filing bankruptcy will halt foreclosure. Chapter 13 bankruptcy, provides powerful tools for resolving several common problems for mortgage borrowers. A chapter 13 plan can get you out of default and allow you to keep your home. Mortgage distress has long been among the leading reasons individuals file for bankruptcy. Many Americans have turned to bankruptcy to save their home.
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Filing bankruptcy stops collection activity on debts. The bankruptcy can stop phone calls, letters, threats, and lawsuits. If a creditor refuses to stop, you may be entitled to damages from it. The automatic stay created upon filing a bankruptcy petition halts all collection activity. Upon obtaining a bankruptcy discharge, creditors whose indebtedness was discharged are permanently enjoined by the court from attempting to collect the debt from you personally in the future.
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Bankruptcy stops threats of repossession. The bankruptcy automatic stay halts collection activity, and the lender must obtain court permission to repossess a car after bankruptcy has been filed. In chapter 13 bankruptcy, you can pay off a car loan, even if you are behind on payments. Sometimes, chapter 13 provides improved financial terms for paying the car lender.
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Unpaid judgments are problems that linger for years. A bankruptcy discharge voids most judgments, preventing a creditor from collecting on the judgment in the future. If you own real estate, a judgment lien may also exist, which is not automatically voided. In many cases, judgment liens can be removed or reduced in bankruptcy.
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Medical bills pile up quickly when there is an unexpected illness. A bankruptcy discharge eliminates most medical debt. Medical debt does not get special treatment in bankruptcy.
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Bankruptcy remains very effective at eliminating credit card debt. Ordinary credit cards are unsecured loans that are discharged by the bankruptcy discharge in chapter 7 or chapter 13. Bankruptcy is a true and effective way to get out from credit card debt.
