How can bankruptcy help you?
Jan 27, 2022Often people feel embarrassed or ashamed about being in debt and having to file bankruptcy. However, bankruptcy was created to offer a fresh start from financial burden and is more common than you think. In fact, according to the U.S. Courts, 544,463 people filed for bankruptcy in 2020. Some of your friends or coworkers could have benefited financially from filing bankruptcy, but you would never know. Unfortunately, it is not something people talk about, but it is wise to review all debt relief options. So, let’s discuss bankruptcy and how it can help you.
WIPE OUT DEBT
Chapter 7 bankruptcy can eliminate credit card debt, medical bills, payday loans and other unsecured debts. With secured debts, like your home or car loan, you have a choice. You either keep the asset and reaffirm the debt or you can surrender the asset and no longer be responsible for the debt. If you have fallen behind on a secured debt, then a Chapter 13 bankruptcy can help you get current on your home or car loan while taking care of your unsecured debts. The amount you pay towards your unsecured debts in a Chapter 13 is based on your income. If your income qualifies, you may not have to pay on them at all.
STOP COLLECTION CALLS
Creditors and debt collectors can be relentless. Not being able to keep up with your bills can be stressful enough. Having creditors and collection agencies call you constantly only adds to the stress. Filing bankruptcy can stop collection calls. In fact, if they continue to call you after your bankruptcy is filed, they can end up owing you money.
Creditors and debt collectors will only try to work with you for so long. If your debts continue to go unpaid, they will most likely file a lawsuit and receive a money judgment against you. They will then use that money judgment to garnish your wages. A wage garnishment takes 20% of your gross earnings, which will only worsen your financial situation. Filing bankruptcy can stop wage garnishment.
STOP UTILITY SHUT OFF
If you are not able to pay your utility bills it will not be long before you receive a utility shut off notice. Wisconsin law prohibits utility companies from shutting off your service from November 1st through April 15th. However, the entire balance will need to be paid in full to prevent your utilities from being shut off. Also, they are not required to reconnect service if you have already been disconnected. Filing bankruptcy can stop your utility company from disconnecting your service. If you have already been disconnected, filing bankruptcy can get your utilities reconnected.
STOPS CAR REPOSSESSION
Filing a Chapter 13 bankruptcy can stop your vehicle from being repossessed. The amount you are behind, and the balance of your vehicle loan can be paid over the length of the Chapter 13 plan, which is between 3 and 5 years. A Chapter 13 bankruptcy may also be able to reduce the interest rate and even the total amount owed on your vehicle loan. If you just need to buy yourself a little more time to bring your auto loan current, a Chapter 7 bankruptcy could help. A Chapter 7 bankruptcy can delay the repossession process allowing you a little more time to bring your loan current. If you are not able to bring your loan current, a Chapter 7 bankruptcy can still wipe out any amount still owed after the vehicle is surrendered.
No one wants to lose their home. Filing a Chapter 13 bankruptcy can stop foreclosure even if the Sheriff sale is scheduled. The amount you are behind on your mortgage gets repaid over a 3-to-5-year repayment plan. Any property tax debt or income tax debt can also be included. Unsecured debts such as credit cards, medical bills, and pay day loans can get repaid at a lower percentage; even 0% if your income qualifies. In a Chapter 13 bankruptcy you could qualify for a mortgage modification and reduce your mortgage payment and possibly even get rid of your second mortgage all together.
PROTECTION OF AUTOMATIC STAY
The reason creditors cannot call you, collect from you, take your vehicle or foreclosure on your home is all due to the protection of the automatic stay. The automatic stay is an order put in place directly from the federal court once your bankruptcy is filed. It remains in effect for the entire length of your bankruptcy. The protection of the automatic stay can only be taken away if you fail to stay current on your responsibilities determined in your bankruptcy.
Bankruptcy can provide you with the fresh start you need. Don’t let the myths about bankruptcy discourage you from learning more about it. Bankruptcy is not right for everyone, but it can be the best option for many. We would never suggest someone file bankruptcy if it were not their best option. At Pedersen Law Office, LLC we offer free consultations. We meet with you personally to review your income, assets and debts and help find the best debt relief option for you and your situation.