Why filing for bankruptcy is advised? Because it protects the affected party from various collection actions, including lawsuits, wage garnishment, and even telephone calls. However, it is important to note that not all lawsuits can be blocked by filing for bankruptcy.
There are a few exceptions. As much as bankruptcy does away with many types of bills it can’t stop all creditors from getting at you and it doesn’t wipe out all the obligations owed to a bankrupt person. Let’s take a look at what bankruptcy can and cannot do.
Power of Bankruptcy
Bankruptcy gives people with heavy debt the chance to have a fresh start. A person has the option of filing for two types of bankruptcy depending on the type of debts that they are going through. Each of these comes with different benefits.
Types of Bankruptcy
The two types of bankruptcy are Chapter 7 and Chapter 11.
In Chapter 7 bankruptcy, the trustee has the ability to cancel all of an individual’s debts. While at the same time the trustee can liquidate the property of the affected person to pay the creditors.
The second type of bankruptcy, Chapter 11 is filed by the people who earn a huge amount of income and/or want to protect valuable assets from an auction.
Why Bankruptcy is important
First of all, once an individual files for bankruptcy, an order called the automatic stay is put in place by the court of law.
- This automatic stay prevents creditors from having a go at your property.
- The stay also cushions an individual from facing lawsuits and having their wage garnished.
- However, the affected individual is not protected from criminal cases. And some creditors still have the ability to collect payments from them.
- Secondly, the automatic stay has the ability to stop eviction and repossession of property, even if this is only temporarily. If you can’t afford to pay for your rent, bankruptcy will protect you from your landlord’s eviction case. Other than preventing eviction your property will not be repossessed.
- Thirdly, bankruptcy does very well at wiping out any unsecured debt on your credit card. An unsecured credit card is a debt that a person promises to give back purchased property when they fail to pay for the property after some time. It is important to note that filing for bankruptcy can wipe out most of the unsecured debts except education loans.
other valuable readings:
Conclusion
For people who have continuous financial problems due to many debts, filing for bankruptcy is the best action to do. Even if bankruptcy doesn’t wipe out all your problems, at least it gives an individual space and time to organize themselves and find a suitable way of paying the owed debts.
For any individual who is experiencing financial problems I would advise them to file for bankruptcy immediately. This makes it easy for them to sort out their debt issues without having their property repossessed.
end of post idea for home improvement
view and analyze home improvement ideas at our LetsRenovate center
Helpful article? Leave us a quick comment below.
And please give this article a rating and/or share it within your social networks.
