Bankruptcy can be a good thing, providing a fresh start and an opportunity to rebuild credit. However, it can also mean giving up property such as vehicles, furniture and jewelry.
Besides eliminating unsecured debt, bankruptcy can halt foreclosures, repossessions and wage garnishments. It can also erase some debts, including back taxes and child support debt, though student loans aren’t eligible.
- It helps to moderate the economy
While bankruptcy has a negative stigma, it helps people manage debt and build a fresh financial start. Filing for bankruptcy prevents foreclosure on homes, repossession of cars and the cutting off of utilities. It also stops wage garnishment and allows individuals to restructure their debt. While it doesn’t discharge all types of debt, including alimony, child support and most back taxes, it does help many individuals get relief from the burden of excessive debt that they cannot pay.
Bankruptcy is a legal proceeding where a court reviews your assets and debts to see whether you can afford to repay what you owe. Liquidation bankruptcy is typically used by individuals who have a debt-to-income ratio that indicates they cannot afford to pay their debts. It wipes out some of your debt and a trustee may sell non exempt assets to pay creditors. Business owners file Chapter 11 bankruptcy to create a plan to reorganize the company and pay off its debts.
- It helps to stimulate the economy
Whether you have credit card debt, medical bills, fallen behind on your mortgage or other forms of unsecured debt, bankruptcy can help. While it does not eliminate all debt, it gives you a fresh start by discharging most of it and provides relief from creditors, such as the hounding of debt collectors or wage garnishment. It also protects you from foreclosure, repossession and eviction. An Oklahoma bankruptcy lawyer can discuss your situation and determine if filing is appropriate.
It’s important to note that bankruptcy does not discharge certain types of debt, such as child support, alimony or some tax obligations. Additionally, it can take some time to obtain new credit, as lenders may view you as a high-risk borrower and charge higher interest rates. However, a good attorney can work to overcome this obstacle by providing documentation of your income and expenses to prove that you cannot afford to repay what you owe. This will allow you to secure a more favorable loan.
- It helps to prevent crime
One of the major aims of bankruptcy law is to allow people with debt problems to get a fresh start. Filing for bankruptcy immediately stops (called the “automatic stay”) all creditors from collecting any debts from a person, at least until they are sorted out by the court. This stops foreclosure on your home, repossession of your car or the termination of utility services, among other things.
Bankruptcy also eliminates creditors’ rights to secured property like car loans and mortgages. It does not eliminate unsecured debts like credit card debt or unpaid child support, but it can eliminate other types of non-tax unsecured debts, such as restitution to victims, most student loans and criminal fines.
- It helps to eliminate debt
Bankruptcy can be a good option for people who cannot make a dent in their debt through other means. It can eliminate or reduce debt for individuals in dire financial situations by liquidation (Chapter 7) or reorganization (Chapter 13). Bankruptcy prevents creditors from garnishing wages, repossessing cars or foreclosing homes, and temporarily stops wage garnishment, foreclosures and utility shut-offs. However, some debts are not dischargeable, such as child support or alimony, and student loans and certain tax debt.
The two primary types of bankruptcy are Chapter 7 and Chapter 13. Each treats debts and property differently. Both help eliminate unsecured debt, such as credit card debt, and halt foreclosures and repossessions. In addition, both allow for a fresh start and prevent wage garnishment and utility shut-offs. However, both have serious downsides and can have a long-term impact on your credit. Before you file for bankruptcy, be sure to weigh all your options and consider debt counseling. The most important thing to remember to do would be to consult a bankruptcy lawyer in Harrisburg, PA who will have the knowledge and experience to help you.
