It is not easy to file for bankruptcy because of the social stigma attached to insolvency. Contrary to popular belief, bankruptcy is not the end of the world. In a weak economy with high unemployment rates, it is tougher to pay off all your loans and you are not alone in your financial struggles. If you are neck deep in debt and creditors have made your life a hell for you, filing for bankruptcy can save your life, and even your property and other assets. Here are some reasons why going bankrupt is a good option.
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Legal Actions Against You are Stopped
As soon as the debtor files a petition, he gains an instantaneous automatic stay order from the court. Once the court issues this stay order, creditors can no longer hound you through their collection attempts. You can permanently prevent many or all of the following creditor actions - evictions, foreclosures, utility shut offs, attachments, garnishments, repossessions.
The creditors will have to put an end to their collection efforts; otherwise they risk attorney fees, monetary damages and contempt of court. With the court issued automatic stay order, a debtor gets a short breathing time to resolve his financial issues.
Other Bankruptcy Protections
Bankruptcy offers other protections as well. You can regain or keep your driving license only through filing for bankruptcy (if your Drivers Licence was revoked due to non payment of an accident related debt). With your Drivers Licence you can again look for jobs and hope for a steady income.
You will also be protected against any kind of governmental discriminatory actions. Even a private employer of yours cannot discriminate against you. Violation of court issued orders will bring about strict penalties.
Modification or Elimination of Secured Debts
Bankruptcy provisions and laws can reduce or eliminate many kinds of property liens, probably because the property costs much less than the liens themselves. It is possible to minimize secured debt payments.
You can even gain a reasonable amount of time to resolve issues regarding defaulted secured debt. Therefore, filing for bankruptcy often allows you to retain your furniture, car or your house as there are clauses for dealing with majority of the secured creditors.
Debt Discharge
The main goal of majority of the bankruptcies is to discharge as many unsecured debts (credit card debts, personal loans, medical bills) as possible. This means elimination of personal obligations for paying off different kinds of debt.
However, you should remember that it is not possible to discharge a few kinds of debts. Sometimes liens on collateral property can survive and is therefore not dischargeable. Because laws and rules can change it's always best to talk to a trustee to know what the various exemptions are.
Debt discharge can free up some of your income, allowing you to access more money to pay off the more significant debts.
Emotional Relief
Although some people can feel a sense shame and humiliation about bankrupt the fact is they should not. People make mistakes, jobs get lost, unexpected expenses pop up, businesses fail and the list goes on and on.
Managing money is something you are taught and if you have not learned how to handle your finances properly in an economy that literally can't survive without you and me going into debt, it is easy to get in over your head, lots of people do.
Filing for bankruptcy can be a very good thing for your emotional health. People report that the strife and tension in their home is drastically reduced, the bickering over money subsides and all that underlying tension is gone. They don't get a wave of anxiety every time the phone rings thinking that it's a bill collector and there is a real sense of regaining control of their lives.
In closing, bankruptcy has a silver lining in that it teaches you how to manage and budget without relying on credit. This may seem tough at first but the benefits will become apparent in no time! We hope this information has been helpful and perhaps a bit encouraging.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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