Debt Advice: Advantages to Filing for Bankruptcy

It is hard to believe but there are actually maybe a few advantages to filing for bankruptcy. By far the most significant advantage is that those who are in debt can receive a new financial beginning. Consumers who are qualified for Chapter 7 possibly could be forgiven (discharged from) nearly all unsecured debts. This can relieve a financial burden for many people and their families.

What about a secured debt? What exactly is a secured debt? Well a secured debt is one which the creditor is entitled to collect by seizing and distributing certain assets of the debtor if payments are overlooked. For an example: assets as a home mortgage or automobile loan. With those two outstanding exclusions, almost all consumer debts are unsecured. Those assets maybe exempt so you possibly will be able to hold on to most of your assets, although state laws vary widely in specifying which assets you could keep. So you may want to do some research on the individual state that you reside in and find out what their specific laws are concerning bankruptcy.

It is reassuring to most people that collection attempts must stop as soon as you file for bankruptcy under Chapter 7 or Chapter 13. As soon as your bankruptcy petition and request is filed, there is by law an automatic stay, which forbids nearly all collection action.

If a by chance, although this rarely happens but if a creditor carries on trying to collect the debt, the creditor could be possibly cited for contempt of court or even be ordered to pay damages. The stay applies even to the loan that you might have received to purchase your car. This is a relief to many many people to know that they and their family are not going to lose everything and end on the streets.

It is important to remember that if you do proceed in making payments, it is a very remote chance that your creditor will do anything. On the other hand, if you neglect your payments your creditor will likely petition to have the stay lifted so that they wil have the authority to either repossess your car or to renegotiate your loan.

One addded advantage of filing for bankruptcy is that you usually can not be fired from your job entirely because you filed for bankruptcy. That is reassuring especially in these tough economical times.