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Filing bankruptcy is a legal option for those struggling with debts that they cannot afford to pay. While personal bankruptcy is often seen as a last resort, the truth is that bankruptcy laws offer legal protection that most other debt-relief options do not.
Deciding if bankruptcy is the right choice and determining if you are eligible to file depends on your unique situation. Let a local attorney assess your financial needs in a free case evaluation. Connect with a bankruptcy lawyer near you today – just fill out the form on this page to get started.
Bankruptcy Protections – What Are They?
Personal bankruptcy offers two key legal protections – one that begins the moment that you file bankruptcy and one that take effect when your case is finished.
The first is called the Automatic Stay. This is a court order that makes it illegal for your creditors to call you, send letters for payment, or garnish your wages during your case. It can also halt foreclosure and repossession efforts in their tracks. The automatic stay typically goes into effect once the bankruptcy court clerk receives your bankruptcy petition and last for the duration of your case.
The second protection is the Debt Discharge. Upon the successful completion of your bankruptcy case, the debt discharge will prevent all future collection efforts by creditors on the debts that were included in your filing and discharged by the court. The debt discharge ends your legal obligation to pay the creditors in your bankruptcy case.
Bankruptcy laws may also protect certain property and assets from creditors. In a Chapter 7 bankruptcy case, the court is allowed to seize certain assets to pay creditors a portion of the debt owed. The good news is that each state has exemptions that prohibit the courts from taking some things – such as homes, cars, and retirement accounts. These exemptions vary by state, so be sure to learn the laws with help from a local attorney and see how much of your property you might be able to keep in a Chapter 7 bankruptcy.
Chapter 7 vs Chapter 13
Chapter 7 bankruptcy is generally a relatively quick legal process designed to wipe out unsecured debt, like credit cards, payday loans and medical bills. The typical Chapter 7 case is over as quickly as 4 months. Not everyone is able to file Chapter 7, but if you have little or no monthly income, you’ll likely qualify.
Chapter 13 bankruptcy creates an affordable payment plan, with monthly payments made to the bankruptcy court over a period of three-to-five years. Chapter 13 allows you to catch up on payments for secured debts, like a home mortgage or car loan.
Deciding which type is right for you, if any, depends on a number of factors, such as your income, types of debt, and whether you own valuable property not covered by your state’s exemptions. Speak with an attorney to decide if bankruptcy could be right for you. Just fill out the free case review form on this page to arrange a no-obligation bankruptcy consultation with an attorney in your area.
