Understand how bankruptcy might impact you

 Posted on April 07, 2020 in Bankruptcy

Life's circumstances sometimes aren't the best. When your money is impacted by things out of your control, you might feel helpless. You know that your bills need to be paid, but you don't have a way to make that happen. Your focus then becomes making sure that you're doing your best to take care of necessities. Other bills, such as credit cards and medical accounts, might go untouched.

For some people, the situation becomes too much to handle, and they know they need to do something. Filing for bankruptcy is one option that they have in these cases. Consumers will typically either file a Chapter 7 or Chapter 13. The primary difference between these two is that the Chapter 7 bankruptcy liquidates nonexempt assets and doesn't require the person to make any payments. A Chapter 13 liquidates some assets, but the person has to make payments to the bankruptcy trustee on a set schedule.

One benefit that both bankruptcy types offer is the automatic stay. Once you file, creditors can't contact you to demand payment. This puts a stop to phone calls and collection letters, so you can have peace of mind while you're getting your finances back in order.

While the automatic stay can do things like stop wage garnishments and temporarily prevent utility disconnections, foreclosure and eviction, it can't do everything. Things like back child support and tax payments aren't included in the automatic stay.

It's usually better to file for bankruptcy sooner rather than later so that you can start getting back on track financially. Working with someone who is familiar with the process can help you ensure you meet the requirements, so things can move forward smoothly.