There are many misconceptions about the bankruptcy process that can make you think it is not a viable option for you to get out of debt. But in reality, there are several real benefits.
Perhaps the greatest source of relief for distressed debtors is what is known as the automatic stay. As soon as your bankruptcy attorney files your petition, the automatic stay goes into effect – meaning that creditors must stop all their collection efforts, including phone calls, letters, lawsuits or anything else they are doing to try to collect on a debt.
The automatic stay also prevents secured lenders – those who hold your mortgage or car loan note – from repossession, foreclosure or selling any of your property. However, when it comes to secured creditors, these benefits are temporary – if you do not keep up with your payments after your bankruptcy is over, secured creditors can still proceed with a foreclosure, repossession or sale of your property.
By filing, you can potentially:
Eliminate credit card debt – Credit card debt is “unsecured” debt – which means it is not secured by a lien, like a house or car. Bankruptcy was specifically designed to eliminate unsecured debt; however, if you file for Chapter 13, you may have to pay off a portion of your credit card debt over a three to five year period.
Eradicate unsecured debt – In addition to credit card debt, you may have other unsecured debt like medical bills that is eligible for discharge by filing.
Remove some liens – In some instances, you can invoke certain procedures during bankruptcy to eliminate certain liens. Your Nebraska bankruptcy attorney can best advise you on this.
Stop credit collection activities – Probably one of the most welcome benefits for bankruptcy filers is that a filing stops creditor harassment. In fact, creditors must cease all collection activities once bankruptcy is filed.
Stop foreclosure – Only Chapter 13 can prevent foreclosure by forcing a lender to accept a repayment plan, but only if you can show you have enough income to adhere to that plan.
In general, bankruptcy cannot eliminate tax debt, student loan debt, child support and alimony, or prevent a creditor from repossessing secured property. However, there are a few exceptions to these rules, so your best bet is to consult with a Nebraska bankruptcy attorney.
Figuring out whether to file bankruptcy can be overwhelming. Contact Koenig│Dunne today and schedule your free consultation with one of our experienced attorneys.