Whether you are living paycheck-to-paycheck or experiencing a short-term reduction in income, there are solutions to help protect your lifestyle. You may find yourself losing sleep over the thought of having your vehicle repossessed or home foreclosed on. Fortunately, bankruptcy makes it possible for you to keep your sanity along with your home, car and certain assets.
It is not necessary for you to hide from or ignore your creditors nor do you have to let your circumstances continue to negatively impact your credit profile. Bankruptcy is a viable option that you should consider if you believe you have no other resources to lean on. Though it is not for everyone, if you qualify, you may reap the following bankruptcy benefits.
Contrary to popular belief, bankruptcy does not erase all kinds of consumer debt. Chapter 7 is a legal provision that allows filers to avoid liability for certain debts. The types of debt that qualify for bankruptcy discharge include credit card, medical, tax liens and unsecured. There are specifications over the types of debt that qualify for discharge.
Regain a timely payment history
Unlike Chapter 7 that allows eligible filers to emerge from its protection practically debt-free, Chapter 13 enables filers to catch up on their delinquent payments to bring their accounts current to avoid foreclosure, repossession and other adverse collection activity.
If your wages are in danger of garnishment, the automatic stay in Chapter 7 and 13 bankruptcy can provide you with some relief. The automatic stay starts after you file for bankruptcy. It mandates that all collection attempts stop, even garnishments. However, the stay does not apply to recent tax debts, child support, alimony and student loans.
In addition to the above benefits, using the time you are under bankruptcy to improve your financial management skills can help you to avoid similar issues in the future.