While considering the major decision of bankruptcy, the most likely inputs received are from friends, family, articles, and many other sources, which may or may not be correct. Bankruptcy often subjected as the worst-case scenario, is generally surrounded by myths and misunderstanding.
Although the critics of the bankruptcy filing process exaggerate on its negative points, there is no denying of the fact that none of the debt-struggling choices would come easy and stress-free. The bankruptcy can ultimately provide the much-needed debt relief over a period of time if guidance from an expert is taken. The best bankruptcy lawyers in Colorado can offer accurate information and advice to understand the benefits of this social stigma.
Following are the various benefits which bankruptcy can bring in one’s life:
Elimination of Debts
The first and foremost glaring benefit of bankruptcy is that it helps in complete elimination or dramatic reduction of the debts owed by an individual by filing it under Chapter 7 which allows the liquidation of the assets helping in discharge of debts or under Chapter 13 where restructuring of the payment plan is done to give away the debt.
- Credit card debt is the most common reason for bankruptcy;
- IRS tax debt is discharged by filing bankruptcy and is also prevented from accruing further interest and penalties;
- Medical bills debts are the unsecured debt that can be discharged by filing bankruptcy under Chapter 7 or 13. Accidents, unexpected prolonged illness, and injuries can lead to the scaling up of the medical bills.
- Phone and Utility bills are discharged along with most of the other loans as well.
Filing for bankruptcy ceases the process of foreclosures giving more time to decide your next plan of action, whether to keep the home by affording payments or to give it up and consider downsizing. The option to save your house differs depending on the Code under which you file the bankruptcy, Chapter 7 or Chapter 13.
If one considers that the house would not be worth keeping in the long run, the bankruptcy should be filed under Chapter 7 of the Bankruptcy Code, as it would result in losing the house. However, filing Chapter 7 bankruptcy before the foreclosure would allow them to keep the foreclosure off their credits and eliminate any potential balance from the house. Also, it allows the foreclosure process to start back over buying you time for three months or more to stay in that house, rent and mortgage free helping you to save money for your next house to move in.
Filing bankruptcy under Chapter 13 would allow to keep the house and get a repayment plan. It helps in reorganizing your mortgages and what all is left behind on the house for three to five years, thus helping in saving your house.
The most amazing feature of filing bankruptcy is the automatic stay under which the creditor is prohibited by the federal law to contact the debtor in any possible way. It puts an end to the constant harassment of the creditor to recover the debt through repeated phone calls, threats, in-person meetings.
Bankruptcy also puts a stop to the wage garnishments or any judgments or lawsuits which are pending against you. Besides, bankruptcy also puts an end to repossession of the car or other valuable items.
The creditors are anyhow forbidden by providing you the room to breathe and they can be sued if they continue to contact you.
Protection of Assets
Bankruptcy safeguards your various possessions shutting out the misconception that it strips you off even the last penny. Chapter 7 of bankruptcy code known as the liquidation bankruptcy includes a lot of exemptions, which means it protects the house, vehicles, land, furniture, other household items and even cash in some states.
Moreover, the retirement plans of the individuals are also maintained and are saved by providing protection to their pension accounts.
All in all: A Fresh Start
Bankruptcy, the last resort for financially collapsed people provides relief from the debts while restricting the creditors’ harassment and even maintaining the property. With the consultation of bankruptcy lawyers in Colorado, one can smoothly overcome the process of filing bankruptcy and attain a clean slate for rebuilding your finances with a fresh beginning. Without any doubt, the road of bankruptcy is paved with many difficulties leading through the journey of financial recovery to a stress-free destination.