Summary: Bankruptcy may be an option for debt relief. Bankruptcy is usually a last resort but should be carefully considered along with non-bankruptcy options.
What Bankruptcy Can Do
Bankruptcy may remove the burden of overwhelming debt from your shoulders. In the appropriate case, bankruptcy may totally wipe out debt, lower car payments, or catch up on a mortgage or taxes. One of the most important tools available is the automatic stay. This is a legal term for the Court Order that may stop creditors from attempting to collect a debt. The automatic stay is called automatic because it usually goes into effect immediately when the bankruptcy is filed. The purpose of the automatic stay is to protect a debtor from losing property or being harassed by creditors.
Bankruptcy may give you options depending on the facts of your case:
- Gives you a chance to start over and regain financial stability
- May allow you to repay only a portion of your debts and still keep your home, cars, personal property and dignity
- May wipe out unsecured debts, such as loans, credit cards or medical bills
- May stop foreclosure, tax seizures, repossession or wage garnishment
The United States Courts offer a series of bankruptcy videos called “Bankruptcy Basics” that provide information about the bankruptcy process. Bankruptcy cannot help in every situation. Alternatives to bankruptcy should always be considered, such as settling with creditors or requesting reduced payment plans.
Your Next Step to Debt Relief
If you are struggling with debt, consult with an attorney who can give you guidance on options available to you. Each case is different and consultation with an attorney knowledgeable about the law as it applies to your particular circumstances is an important first step in resolving debt.
Read More About Bankruptcy and Debt Relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – Does everything that Chapter 7 does, but with the added benefit of being able to help catch up on past due mortgages, car payments, and taxes.
Taxes – If you owe money to the IRS, there may be several different options for you, including some non-bankruptcy options.
Student Loans – There are many solutions to student loan issues, including getting a better payment plan, curing a default, and even loan forgiveness.
Debt Lawsuit Defense – When a creditor sues you over a debt, you can respond with a defense, which may allow you to win the lawsuit.
Loan Modifications – A special agreement between you and your mortgage lender might help you with a past due mortgage loan.
Debt Library – More in-depth articles on some of the more detailed areas of bankruptcy and debt relief.