The idea of filing for bankruptcy can be scary, but it doesn't have to be. Often, people fear the bankruptcy process simply because they don't know enough about it to know the potential benefits. While there are some considerations to make before you file, it is important to familiarize yourself with both the concerns and benefits of the bankruptcy process.
Automatic Stay
One of the most immediate benefits to filing for bankruptcy is the halt to all debt collections. When you file for bankruptcy the court issues an automatic stay order; requiring creditors to halt collections. Whether you are experiencing repeated phone calls, letters of collection, or are having your wages garnished to satisfy a debt, the automatic stay order will cease them all. This order can even prevent or stop a foreclosure or asset repossession. The automatic stay order grants you legal protection from creditors and their collection attempts while you work out a debt resolution plan under the supervision of the court.
Debt Resolution
In terms of debt resolution, it is true that bankruptcy is only one of your options for finding relief from your debts. The benefits bankruptcy can offer is how your debts are resolved, which can be much easier than other forms of debt relief. In a Chapter 7 bankruptcy, your debts will be eliminated through the liquidation of non-exempt, non-essential assets. Before you fear losing your valuables, it is important to note that bankruptcy exemption laws offer protection over much of your essential property. Texas, in particular, is one of the most lenient states for exempting assets from liquidation in bankruptcy. In a Chapter 13 bankruptcy a portion of your debts will be repaid through a repayment plan. This plan rolls your eligible debts into a single monthly payment, which is determined by your disposable monthly income. Any remaining portions of the debt will be eliminated at the end of your repayment plan period, typically three to five years.
Credit Recovery
You may have heard that bankruptcy is bad for your credit. This statement is misleading. Yes, a bankruptcy filing can remain on your credit report for up to ten years, but that doesn't necessarily make it a bad thing. What's worse is high debt balances, missed payments, a poor payment history and delinquent account standings; all of which can be erased by filing for bankruptcy. After a debt discharge in bankruptcy you are given a clean credit slate, to which you can rewrite a new and positive credit history for yourself. Credit recovery after bankruptcy is far easier, and much faster, than continuing to sludge through massive debt payments for years to come.
Automatic Stay
One of the most immediate benefits to filing for bankruptcy is the halt to all debt collections. When you file for bankruptcy the court issues an automatic stay order; requiring creditors to halt collections. Whether you are experiencing repeated phone calls, letters of collection, or are having your wages garnished to satisfy a debt, the automatic stay order will cease them all. This order can even prevent or stop a foreclosure or asset repossession. The automatic stay order grants you legal protection from creditors and their collection attempts while you work out a debt resolution plan under the supervision of the court.
Debt Resolution
In terms of debt resolution, it is true that bankruptcy is only one of your options for finding relief from your debts. The benefits bankruptcy can offer is how your debts are resolved, which can be much easier than other forms of debt relief. In a Chapter 7 bankruptcy, your debts will be eliminated through the liquidation of non-exempt, non-essential assets. Before you fear losing your valuables, it is important to note that bankruptcy exemption laws offer protection over much of your essential property. Texas, in particular, is one of the most lenient states for exempting assets from liquidation in bankruptcy. In a Chapter 13 bankruptcy a portion of your debts will be repaid through a repayment plan. This plan rolls your eligible debts into a single monthly payment, which is determined by your disposable monthly income. Any remaining portions of the debt will be eliminated at the end of your repayment plan period, typically three to five years.
Credit Recovery
You may have heard that bankruptcy is bad for your credit. This statement is misleading. Yes, a bankruptcy filing can remain on your credit report for up to ten years, but that doesn't necessarily make it a bad thing. What's worse is high debt balances, missed payments, a poor payment history and delinquent account standings; all of which can be erased by filing for bankruptcy. After a debt discharge in bankruptcy you are given a clean credit slate, to which you can rewrite a new and positive credit history for yourself. Credit recovery after bankruptcy is far easier, and much faster, than continuing to sludge through massive debt payments for years to come.