Get Out Of Debt

If you have reached a point in your life where your debt has piled up and you are considering filing bankruptcy, then odds are that life hasn’t been too pleasant for you lately. One of the worst issues you will have at this time is the harassment by creditors, fear of repossessions, and utilities being turned off.

While these issues shouldn’t be the reason for filing bankruptcy one “benefit” (if it can be called that), is the automatic stay. The automatic stay is “automatically” put in place and accomplishes several things including protection against bill collectors, foreclosure, utility disconnections, and being evicted. There are some cases where it isn’t automatic such as when people have recently filed other bankruptcies. Here are some points of relief that the automatic stay can give you during this stressful time:

Foreclosure – An automatic stay will temporarily stop foreclosure. The creditor will probably be able to foreclose eventually if you file Chapter 7, but this will buy you some valuable time to make decisions. Chapter 13 bankruptcy is a better option if you want to keep your house and you can usually file a bankruptcy petition any time before the sale of your house. Utilities – If the utility company is threatening to cut off your water, electricity or gas, the automatic stay could give you up to 20 days of extra time. Once you file bankruptcy the automatic stay will force the utility company to reconnect your service if your utilities have already been disconnected. Wage Garnishments – Garnishments as in the case of child support and alimony will be completely stopped when bankruptcy is filed. Your paycheck will be protected and you will be able to take home a full salary and can also discharge the debt in bankruptcy. Eviction – Some help will be provided, but the new bankruptcy law makes it easier for landlords to evict you. If your landlord already has a judgment of possession against you when you file, the automatic stay won’t affect these eviction proceedings; the landlord can continue just as if you hadn’t filed for bankruptcy. Also if the landlord alleges that you’ve been endangering the property or using controlled substances there, the automatic stay won’t any good. In some cases, the automatic stay might give you a few days or weeks but the landlord can ask the court to lift the stay and the court will probably do so. Repossession – Your car cannot be repossessed while you have an automatic stay but this does not prevent you from having to handle the issue by reaffirming your car loan of returning it. You may be able to save your car with a Chapter 13 Bankruptcy but will have to make your trustee payments. Also, you need to be aware that a creditor can ask a judge to lift the stay so they can repossess.

As you can clearly see, an automatic stay won’t solve all your problems but it does give some temporary relief. It will stay in effect until you complete the bankruptcy and receive a discharge, the judge lifts the stay when a creditor requests it, and the property you want to protect is no longer a part of the estate. Be sure to read further information before you make any decisions about filing bankruptcy so you can be well-informed.

Debt is something everyone lives with in some way, shape or form. Much of the debt load a person has is based upon a specific level of income. When that income stops or debt load becomes too high, payments may fall behind and the debtor is forced to try and regain some financial foothold on life through bankruptcy. Other reasons often include student loan debt and medical debt.

Life is all about balancing income and expenses. While many people have a firm hold on their bills, emergency expenses, loss of a job or medical bills can quickly force finances out of balance. Secured debt, like cars and homes, are the hardest hit because lenders do not care about why the bills are not being paid, just that their property is sitting out there worthless to them unless those bills ARE paid. With foreclosures and repossessions on the horizon, a bankruptcy claim may be the saving grace of a person or family.

Taking a look inside the life of financial turmoil can better explain why people choose to make a bankruptcy claim. Imagine the phones ringing off the hook day and night with creditors wanting the money they are owed. Many of these creditors will work for companies providing unsecured credit which means they will talk hard and fast trying to reclaim their money. No physical property is attached to unsecured debt, so no matter how many times you tell them you cannot pay the bill, they will continue to call hour after hour.

Once bills have gone unpaid for an extended length of time, creditors have the right to file legal cases for payment against the debtor. Or, they can choose to sell the debt to a collector that works every day recovering money. If the debt is part of a court case, the debtor risks losing property and income. This is not to mention other legal ramifications like the loss of a job if security clearance is required. Car insurance, phone, cable, gas and electric companies all check credit ratings before allowing new utilities or insurance to be set up.

Now, the debtor is receiving calls 24 hours a day, they cannot work and they have no utilities in their home because of bad credit scores.

Filing a bankruptcy claim is often a last resort for the debtor. Life unbalanced by debt and financial obligation is life in turmoil. Bankruptcy can protect secured debt property and remove the weight of creditors calling all the time. Whether debt is liquidated through Chapter 7 or restructured with Chapter 13, there is some relief from the financial hole the debtor has been living in for so long.