What Advantages Are There To Filing Bankruptcy?

The situation is all too common these days

The situation is all too common these days. You cannot pay your debts as they come due. Your credit card debt soars. You start to screen your phone calls to avoid unpleasant demands for payment. Your paycheck is garnished. When the common warning signs of overwhelming debt begin to rear their heads, a debtor must ask himself whether or not bankruptcy is a viable option. So what are some of the advantages of filing bankruptcy?

Creditors have a number of tools at their disposal. Their primary weapon is the telephone and they can end up calling friends, family and your workplace. You may receive threatening letters or electronic communications. Your paycheck may come and, to your dismay, is woefully thin, having been garnished by a creditor. You could receive notifications that a property is being seized. Filing bankruptcy stops collection efforts against you. Even creditors who received a judgment against you must cease all actions once a Chapter 7 or Chapter 13 bankruptcy proceeding is filed. Once an Automatic Stay in Bankruptcy is imposed by the court, a creditor must stop all actions even if they previously had the right to repossess property. Therefore, the debtor is able to obtain a fresh financial start and keep their assets.

There is a common misconception that you may be dismissed from your job as a result of filing for bankruptcy. An employee may not dismiss you for filing bankruptcy. This is not to say that there arent disadvantages as well.

Bankruptcy is not a magic bullet. Bankruptcy will not protect you from obligations such as maintenance or alimony agreements, recent taxes or government fines. If while filing, you neglect to list a specific creditor, that creditor still will have the right to pursue the payment of your debt to them. These debts are referred to as non-dischargeable. Other examples include student loan debt, debts from damages and injuries as a result of drunk driving and debts that are a result of intentionally malicious or deceptive behavior by the debtor. After filing for bankruptcy, the ability to gain new employment may be impeded for several years after filing.

Finally, special circumstances exist for Chapter 7 and Chapter 13 bankruptcies that can be discussed with qualified counsel. For example, a Virginia bankruptcy lawyer might advise a client to seek Chapter 13 in the case of a traumatic setback such as an injury or job loss where the client now had resumed working. The advantage in this case is a single monthly payment paid to a court-appointed trustee rather than multiple payments.

by: Louis Nuzzo

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