Advantages of Bankruptcy
Filing bankruptcy gives you immediate relief from your debts and your creditors. Once you have filed your bankruptcy Petition with the Bankruptcy Court, you are protected by the “Automatic Stay.” The Automatic Stay is a bankruptcy-related restraining order that prohibits your creditors from collecting on most types of debts. Most creditors cannot start or continue lawsuits, foreclose on or repossess your assets, garnish your wages or financial accounts, or even make telephone calls to you. Your creditors are notified of the bankruptcy filing by the court clerk.
By filing bankruptcy, you can:
- Stop Collections Calls and Letters from Creditors
- Block Garnishment of your Wages or Bank Accounts
- Block Lawsuits
- Stop Eviction
- Stop Foreclosure
- Stop Repossessions
- Most Importantly: Give You Back Your Peace Of Mind
Filing bankruptcy enables you to “discharge” (wipe out) many of your debts. A successful bankruptcy will:
- Eliminate Your Credit Card Debt and Personal Loans
- Eliminate Your Medical Bills
- Eliminate Money Judgments against you
- Eliminate Deficiency Balances after Repossession or Foreclosure
Depending on your circumstances and they type of bankruptcy you use, you may also be able to:
- Eliminate or pay down tax-related debts
- Reinstate your driver’s license, if it was suspended due to non-payment of traffic fines
- Get caught up on your mortgages or auto loans
Disadvantages of Bankruptcy
Bankruptcy is not all positive. It will have some negative effects. For example, filing for bankruptcy will cause considerable damage to your credit rating, which will impact your ability to obtain credit or financing during and after the bankruptcy. A bankruptcy filing may remain on your credit for up to ten years.
Depending on the type of bankruptcy you file, there may be other potential disadvantages. For example, in the Chapter 7 bankruptcy, you risk the Bankruptcy Court liquidating some of your assets. In the reorganization bankruptcies (Chapters 11, 12 and 13), you have to make regular payments as part of a bankruptcy payment plan, which could last for up to five years.