Bankruptcy is one of the quickest and most affordable options to get out of debt. This is because bankruptcy stops debt collectors and even protects your assets. The most apparent benefit of filing for bankruptcy is to eliminate debts or dramatically minimize them. This legal process is known as "discharge". In other words, the individual is not obligated to pay certain debts once a bankruptcy case has been completed. This commonly occurs approximately three months after filing for Chapter 7 bankruptcy.
Certain debts cannot be entirely eliminated, like fines resulting from criminal activities, alimony, child support, most student loans, and some taxes. Almost all of the remaining types of debt can be settled, including credit card debt, medical account debt, payday loans, and other unsecured debts.
A legal benefit that the vast majority are unaware of is the "automatic stay." A provision that the bankruptcy code offers as protection between creditors and debtors. This means that according to the federal law, collectors will be restricted from contacting you for collection purposes, and any action that exists against you will be stopped. This also includes lawsuits, liens, and even evictions.
There is a misconception that the moment a person files for bankruptcy, all of their possessions are taken away. The bankruptcy code includes exceptions. These are used to exempt a large number of assets from being liquidated, such as homes, land, vehicles, household items, furniture, clothing, and in some cases, even cash. In addition, retirement funds can also be protected.
Filing for bankruptcy means having the opportunity to start fresh, but it does not mean that you have to start with nothing. If you are in a difficult financial situation, filing for bankruptcy can be the light at the end of the tunnel. Consulting with a Citrus Heights bankruptcy attorney can help you learn about all the available options.