If you are considering filing for bankruptcy, you probably have many questions, we have bankruptcy facts for you to consider. There is so much misinformation floating around about bankruptcy that many people who greatly benefit from filing for bankruptcy never consider it. But bankruptcy protection is your legal right and it may be the best financial decision for you and your family.
We’ve put together a list of 8 Bankruptcy Facts so you are empowered to understand how bankruptcy can help you get out of debt.
- Bankruptcy can erase credit card debt, medical debt, and other debts.
Bankruptcy is a powerful tool that can erase certain debts and give you the fresh financial start you deserve.
The following types of debts are generally dischargeable (erased) in bankruptcy: credit cards, medical bills, collection agency debts, personal loans, past due rent, certain older tax debts, most civil court judgments, and other unsecured debts.
If you successfully file for bankruptcy, your dischargeable debts are erased forever and you are not obligated to pay them back.
- Bankruptcy cannot erase certain types of debt.
When it comes to bankruptcy, not all debt is created equally. Dischargeable debts may be erased, but nondischargeable debts cannot. Nondischargeable debts include back child or spousal support, student loans, recent tax liabilities, certain fines imposed by the government, and certain debts incurred right before filing for bankruptcy. This list is not exhaustive. Due to either the type of debt you owe or when or how it was incurred, you may have other debts that are also nondischargeable. An experienced bankruptcy attorney can help you understand which of your debts are dischargeable and which are not.
- Bankruptcy law provides for you to keep certain belongings, assets, and property valued up to a specified amount. Most people who file for bankruptcy get to keep most or all of their belongings.
It is a common myth that if you file for bankruptcy you have to give up all of your possessions. The U.S. Bankruptcy Code, as well as Georgia law, provides for you to keep the property, assets, and other belongings valued up to a certain dollar amount through exemptions. Property that is protected in bankruptcy is known as “exempt property.” You get to keep the exempt property if its value does not exceed a certain dollar amount. Learn more in our article What Property & Belongings Are Protected in bankruptcy?
Bankruptcy law is designed to help people, not to cause further harm. The purpose of the law is to give deserving people a fresh financial start.
- Bankruptcy stops collection phone calls.
As soon as you file for bankruptcy your creditors and collection agencies must stop calling you.
- Bankruptcy stops wage garnishment, bank levies, and lawsuits for unpaid debt.
In fact, as soon as you file for bankruptcy, all collection action against you must stop.
This is the power of the Automatic Stay, which is a provision of the U.S. Bankruptcy Code that makes it illegal for creditors to attempt to collect on debts from a person who has filed for bankruptcy protection. In legalese a “stay” is putting a halt on something, stopping something.
- Bankruptcy can (at least temporarily) stop a foreclosure or car repossession.
The Automatic Stay also stops pending foreclosures or car repossession. However, the foreclosure or car repossession may only be halted temporarily.
If you’ve fallen behind on your mortgage or car payments and you wish to retain the property, it will be necessary for you to get current on your payments before the Automatic Stay lifts. Chapter 13 bankruptcy creates an opportunity for a debtor to catch up on mortgage arrears and missed car payments over time.
- Bankruptcy, in some cases, is a better option than paying off debts.
This one seems counter-intuitive. Certainly, if you can reasonably pay back your debts, then you should. However, if it is going to take you many years to pay off your debts, struggling to make ends meet, all the while paying massive amounts in interest penalties and not being able to save for retirement or emergencies―then filing for bankruptcy may very well be the better option.
- Bankruptcy will not ruin your credit forever.
Filing for bankruptcy will decrease your credit score in the short term. Though, consider that if you have fallen behind on your debt payments, your credit is already decreasing. Many people are surprised to find their credit score begins to recover fairly quickly after bankruptcy. Often people are able to get car loans and credit cards months after filing for bankruptcy, and home loans within a few years of filing for bankruptcy.
Free Bankruptcy Consultation
Here at the Law Office of Barbara B. Braziel, we offer free consultations so that you can understand the protections and benefits of bankruptcy and how filing will affect you and your family. We take the time to explain the bankruptcy process to our clients. We invite you to get to know us here and read about the clients we’ve helped here.
To have your questions about bankruptcy in Georgia answered, come meet with us for a free consultation. We proudly serve the people of Savannah, Chatham County, Effingham County, Bulloch County, Bryan County, Liberty County, and Long County.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. Find out more about Bankruptcy in our guide: All About Bankruptcy.