How Can Bankruptcy Help Me?
Many individuals are faced with financial hardship due to high credit card debt, the accumulation of interest on personal loans, and even outstanding utility bill payments. In an attempt to seek relief on outstanding debt, many creditors pursue legal action against debtors by issuing lawsuits. Filing bankruptcy can potentially put a halt to such harsh debt collection measures.
Bankruptcy cases vary from individual to individual, and such it is recommended to consult an experienced attorney in order to maximize the benefits which include:
- Stop wage garnishments. A wage garnishment goes into effect when a creditor gets permission from the court to deduct outstanding payments directly from your paycheck. When you file for a Chapter 7 bankruptcy, The Automatic Stay goes into effect. An Automatic Stay prohibits all collection activities, including wage garnishments.
- Unfreeze bank accounts. Once the court grants a creditor with a judgment against you, the creditor can freeze your bank account by sending the judgment to your bank. This is known as the levy of the bank account. Generally, it takes about one week after filing bankruptcy to unfreeze your account.
- Put an end to creditor harassment. Once you file bankruptcy, creditors are required by law to cease all collection efforts. If a collection agency or a creditor still attempts to obtain payment from you after you filed bankruptcy, they are in violation of the Automatic Stay clause and can be sued. Furthermore, if their interaction with you is of an aggressive nature, you can sue for damages under the
- Halt foreclosure on your home. If you are facing foreclosure and file for a Chapter 13 bankruptcy, you may be able to save your home. A Chapter 13 bankruptcy will give you the opportunity to make up any outstanding mortgage payments. In addition, your attorney will help you determine of your lender was in violation of RESPA, an act which requires mortgage providers to be transparent about additional services fees, penalties and interest on your mortgage.
- It is a common misconception that once you file bankruptcy, you will be unable to obtain credit for up to 10 years. In fact, you might be contacted by credit companies in as little as two years after filing bankruptcy.