what are the benefits of bankruptcy

Bankruptcy provides numerous benefits to consumers, including:

• Creates a fresh financial start
• Discharges a majority of debts
• Can halt foreclosure
• Puts a stop to creditor action
• Offers exemptions for most property

Full Answer

What are the pros and cons of bankruptcy?

Some examples of common dischargeable debts:

• credit card debts
• medical bills
• personal loans
• utility bills
• dishonored checks
• deficiency balance from a repossession
• business debts
• past due rent
• social security overpayments
• civil court judgments that are not based on fraud

More items...

What are the advantages of Chapter 13 bankruptcy?

Advantages to a Chapter 13 Bankruptcy: Provided you can afford the payment plan, you can choose to keep all your property, exempt and non-exempt. Debts are not canceled as in a Chapter 7 Bankruptcy, but they can be reduced under a Chapter 13 bankruptcy. Creditor's collection efforts and wage garnishment attempts are stopped immediately.

What are the negatives of filing bankruptcy?

What Are the Cons of Filing Chapter 7 Bankruptcy?

• You can’t file Chapter 7 if you make too much money. If you’re making less than the median income, you’re probably wondering how that’s even possible. ...
• If you have good credit, it will likely take a temporary hit. ...
• It doesn't erase all unsecured debts. ...
• You can lose certain types of property. ...
• Your Chapter 7 bankruptcy filing doesn't protect others. ...

What are the disadvantages of filing bankruptcy?

The potential disadvantages of bankruptcy include:

• Loss of credit cards. Many credit card companies automatically cancel any cards you hold when you file. ...
• Immediate impact on your credit score. ...
• Difficultly obtaining a mortgage or loan. ...
• Loss of property and real estate. ...
• Denial of tax refunds. ...
• Job and housing stigma. ...
• Non-Dischargeable debts. ...

What are positives of bankruptcy?

Bankruptcy: Advantages and DisadvantagesDISADVANTAGESADVANTAGESBankruptcy will not remove student loan debtNothing will get rid of student loan debt but bankruptcy will prevent your lenders from aggressive collection action9 more rows•Apr 19, 2021

What is the downside of filing for bankruptcy?

Filing for bankruptcy can negatively impact your immediate financial future. Obtaining credit after filing for bankruptcy could mean increased interest rates. Obtaining credit after filing for bankruptcy might require security deposits.

What debts are not discharged in bankruptcy?

Examples of other non-dischargeable debts in a Chapter 7 bankruptcy case include:401k loans.Other government debt such as fines and penalties.Restitution for criminal acts.Debt arising from fraud or false pretenses.Debts you intentionally did not include in your bankruptcy forms.Damages related to a DUI accident.

Do you get out of all debts if you declare bankruptcy?

Bankruptcy Can Wipe Out Credit Card Debt and Most Other Nonpriority Unsecured Debts. Bankruptcy is very good at erasing most nonpriority unsecured debts other than school loans. For instance, you can discharge unsecured credit card debt, medical bills, overdue utility payments, personal loans, gym contracts, and more.

What happens to debt after Chapter 7 bankruptcy?

You will find yourself either without debt entirely or with a much more manageable set of loans left and significantly more disposable income to catch up on any overdue payments. Likewise, at the end of your Chapter 13 repayment period, any remaining debt that is covered will be discharged.

How does bankruptcy affect credit?

Filing for bankruptcy will negatively affect your credit for a period. However, many debtors who turn to bankruptcy have already been languishing with low credit scores for some time. Filing for bankruptcy starts you on the path of rebuilding your credit. You can start improving your credit from day one after obtaining your discharge or starting your repayment period. Some creditors find their score actually improves after filing, as they benefit from a vastly better debt-to-income ratio. After seven years or so, the bankruptcy disappears from your credit report entirely.

What happens when you file for bankruptcy?

When you file for bankruptcy under Chapter 7 or Chapter 13, the bankruptcy court will issue an automatic stay that puts a stop to any and all collection efforts. This includes mortgage foreclosure, auto repossession, and other property repossession. You can take the additional time and relief from debt collection to get current with your mortgage, utility payments, and other remaining debts. You can also fold your car payments into your repayment plan, and you can protect other property from repossession. You get the second chance you need to make your payments current and completely eliminate covered debts.

Do you need credit counseling for bankruptcy?

Debtors who go through personal bankruptcy are required to go through credit counseling as part of the process. You will learn more about your finances, about budgeting and investing, and how to build and retain strong credit in the future.

Kansas Bankruptcy Lawyer

The bankruptcy laws exist in order for you to make a change in your life and to get out from under old burdens. While it is true that bankruptcy is not without its costs it is also very true that most people have suffered for years under crushing debt without relief before turning to bankruptcy.

How Our Team Can Help You Reap the Benefits

At the Kansas Bankruptcy Center, our attorney Norman Douglas has met with hundreds of individuals. As our focus is on consumer finance and bankruptcy we have heard and understood the many concerns people have about making a choice to file for bankruptcy.

What Is Bankruptcy?

Bankruptcy is a legal process that wipes out your debts when you can’t afford to pay them. It’s one option for people who are in financial distress and have few other options left. Filing for bankruptcy will stop most collection efforts, give you protection from lawsuits, stay pending court actions like foreclosures or repossessions.

Who Can File for Bankruptcy?

As you may have guessed, bankruptcy is for people with too many debts and not enough money to pay them. The law provides a safety net when people can’t repay their creditors what they owe, allowing the person to discharge some or all of their debt.

The Benefits of Declaring Bankruptcy

You must understand this process before moving forward with bankruptcy proceedings. Bankruptcy is never easy, but there are many benefits associated with it.

When Should You Consider Declaring Bankruptcy?

One question that may come to mind is, “When should you consider declaring bankruptcy?” While there are many levels of severity and complex considerations when it comes to this topic, the answer can often be found in simply asking yourself a straightforward question.

Do You Need Bankruptcy Lawyers in Plano, Texas?

If you’re considering declaring bankruptcy, the benefits are plenty. Bankruptcy is a difficult decision to make, but it can be the best course of action in some cases.

Ready to file? Call on our Oklahoma City bankruptcy lawyer!

When most people think of bankruptcy, they envision damaged credit scores, empty pockets, and a boot to the street. However, bankruptcy is actually a very effective option that has proven successful for countless consumers throughout Oklahoma and the United States.

Why Bankruptcy Is Beneficial to Consumers

Though bankruptcy is often shrouded in negative myths and misunderstandings, there are many positive things about this financial tool. It was designed by the government to give consumers just like you a second chance with their finances and freedom from their overwhelming debts.

What about the potential disadvantages?

On the flipside, you should keep in mind some of the effects filing for bankruptcy will have on your life. If you choose to file for Chapter 7, it will remain on your credit report for up to 10 years. This means you will likely have to put in significant work to rebuild your credit and may have to wait some time to get another credit card.

What are the advantages and disadvantages of bankruptcy?

Bankruptcy: Advantages and Disadvantages. Declaring bankruptcy can feel like a big step in the wrong direction. Filers find relief from debts but also face new challenges to rebuild their credit and secure loans. It is also common to adjust to a scaled-down lifestyle after bankruptcy.

What does bankruptcy do to you?

Bankruptcy allows you to have a new start. It can feel uncomfortable to explain to a judge, trustee, and attorney how you got into your financial situation. Harassing phone calls from creditors, letters, repossessions, canceled credit cards, declined charge authorizations, and lawsuits will stop.

How long do you have to wait to file for bankruptcy?

You must wait years between bankruptcy filings (if you need it again at a later date) You can file for a Chapter 13 plan if there is another financial disaster before you are eligible for Chapter 7 again. Bankruptcy will not remove student loan debt.

Does bankruptcy hurt your credit?

Bankruptcy can make old tax liabilities (older than three years) go away. Bankruptcy will lower your credit until you work to rebuild it. Missed debt payments, defaults, repossessions, and lawsuits will hurt your credit - bankruptcy can often be the easier option.

Can you adjust to a scaled down lifestyle after bankruptcy?

It is also common to adjust to a scaled-down lifestyle after bankruptcy. But bankruptcy also provides considerable relief for those buried by unsustainable levels of debt. Dreaded phone calls and letters demanding payment will cease as soon as a bankruptcy is declared. Thank you for subscribing!

Can bankruptcy get rid of student loans?

Nothing will get rid of student loan debt but bankruptcy will prevent your lenders from aggressive collection action. You will lose current credit cards. Judges, attorneys, and trustees have seen and heard far worse bankruptcy stories than yours. Bankruptcy can initially feel defeating.

There are many benefits to filing bankruptcy include

All creditors are now repaid. Once you file, the court will issue an automatic stay to stop all debt collection activities. The court will suspend collection proceedings until the bankruptcy case is settled or the stay lifted. It’s that simple.

The possible disadvantages of bankruptcy include

Many credit card companies will cancel your cards once you file. In addition, you will likely be offered multiple “unsecured credit cards” offers after you have filed. These cards are great for rebuilding credit, but they often come with high annual fees and interest rates.

Why is bankruptcy denied?

Bankruptcies may also be denied for technical reasons, unrelated to the honesty of the debtor filing. For example, if paperwork work is not timely or is otherwise filed incorrectly, or other conditions for filing a bankruptcy are not met, the bankruptcy petition may be thrown out.

What are the advantages and disadvantages of filing for bankruptcy?

Declaring bankruptcy gives individuals or businesses that are unable to pay their debts a way to solve their financial difficulties. It can help them start rebuilding their credit and lives in a more positive and financially stable way. In most cases, filing for bankruptcy seems like a scary ...

What is the purpose of filing for bankruptcy?

Bankruptcy is designed to provide relief for those that are unable to pay their creditors back. Listed below are some of the advantages that bankruptcy can provide: Filing for bankruptcy will trigger an “automatic stay” — the automatic stay stops creditors from taking action to collect their debts, and stops creditors from repossessing property ...

Why is it important to have a bankruptcy attorney?

Because filing for bankruptcy is a complex legal claim, finding the right bank ruptcy attorney is important. A bankruptcy attorney will help you decide whether or not to file for bankruptcy, and what type of bankruptcy you should file. Additionally, if you decide to file, an attorney can help ensure that your property is protected, ...

How long does bankruptcy stay on your record?

While a bankruptcy filing will remain on your record for 7-10 years, because debts can be discharged in bankruptcy, many debtors begin improving their credit rating after filing for bankruptcy.

What happens if you can't exempt your property from bankruptcy?

Listed below are some of the most important and common disadvantages: If you are unable to exempt all of your personal property or real estate under the bankruptcy exemptions, some of your property may be seized by the bankruptcy court and sold to pay your creditors.

What happens if you don't have credit cards?

If you don’t have credit cards, you can learn to live within your income and prevent future financial catastrophes. Debtors that file for bankruptcy will have access to financial counseling which will give you access to the tools to better balance your debt and manage your life.

Automatic Stay

Filing for bankruptcy gives you an automatic stay which means your creditors (people you owe money) can’t continue action against you. It halts specific actions that a creditor might use to try and collect their debt. This is issued by the court and is designed to give you time to assess your asset and options in how to best move forward.

Keep House and Car

Bankruptcy is a useful financial tool to help you get out of crippling debt without losing everything you own. Used correctly, it allows you to create a payment plan or liquidate certain assets without losing the roof over your head. Bankruptcy law helps to protect essential housing and even a car from creditors.

Eliminate Debt

Another attractive advantage of bankruptcy is the partial or complete elimination of your debts. In some cases, debts like credit card balances, medical bills and personal loans are cleared altogether. Other debts are settled on average for 40-50 cents on the dollar.

Payment Plan

If you file for chapter 13 bankruptcy you will be given a court-mandated payment plan to help you pay back your debts over a 3 to 5 year period.

Improve Credit Score

Another surprising benefit of filing bankruptcy is the improvement of your credit rating.

Mental Relief and Fresh Start

One thing you may not have considered is the mental health damage that high levels of debt can bring. The stress of debt takes a big toll on you and your family leading to issues including depression and anxiety. This can be damaging to your personal life and make it even harder to get out of debt.

Relearn Financial Habits – no credit

Once you’ve completed the bankruptcy process you’ll be able to rebuild your financial habits without the temptation of going into debt. For a few years, you won’t be able to get a credit card or overdraft to spend money you don’t have. It is time to start learning how to live within your means and only buy things you can afford.

Eliminate Your Debts

The most clear benefit to bankruptcy is to either completely wipe away or dramatically reduce the total amount of debt owed by an individual. This process is legally called a “discharge” of one’s debt.

Stop Collection Efforts

An incredible benefit that many people don’t know about is what’s called the “automatic stay.” This provision of the bankruptcy code provides a firewall between creditors and debtors.

Protect Your Assets

It is a common misconception that filing for bankruptcy will strip an individual of their possessions. While it is true that Chapter 7 bankruptcy is often called “liquidation bankruptcy,” what most people don’t realize is that the bankruptcy code includes exemptions.

Get The Benefits

If you’re in a tough financial situation, filing for bankruptcy could be the light at the end of the tunnel. Consulting with a bankruptcy attorney can show what your options are, sometimes exposing things you might have thought too good to be true.