For some, the thought of bankruptcy is intimidating. But bankruptcy isn’t always a bad thing. If you are in financial trouble, the process could give you the relief you need from your creditors. It may be your chance at a better future.
The Benefits of Bankruptcy
In January of 2018, 560 people in Seattle and Tacoma filed for bankruptcy. Many of those individuals filed because they were aware of the benefits that come with the process. If you successfully file, you could receive one or all of the following benefits:
1. Automatically Stop Collections
If you don’t do anything about your debt, the debt collectors can come after you. They might repossess your car, take away your home, or garnish your wages. Even if they don’t take away your property, the phone calls and letters can be a nuisance.
Fortunately, there is some relief. When you file for bankruptcy, you get an automatic stay on debt collection. Almost all of your creditor’s activities need to come to an end. However, this only lasts until your case is resolved. If the court dismisses your case, the protection is gone.
2. Eliminate Your Debts
If your attempt at bankruptcy is successful, you can get rid of most or all of your debts. Once the process is complete, you receive a debt discharge. This means that you are no longer indebted to your creditors.
There are some debts that cannot be discharged. For instance, it is very difficult to discharge student loan debt. Your only chance at doing so it proving you have undue hardship. Tax obligations, alimony, child support, and debt made through fraud are all non-dischargeable. If you file for bankruptcy, you will still be responsible for those debts.
3. Prevent Foreclosure or Repossession
Your home or your car could be your lifeline. But many individuals who are in debt risk losing their homes and cars.
With bankruptcy, you may be able to keep some of your property. If you file for a Chapter 13 bankruptcy, you get a repayment plan. The plan allows you to become current on your payments. After a period of three or five years, you can be discharged of your debt. While you make the payments, your property remains in your possession.
4. Reorganize Debts
If you have multiple creditors, you might struggle to keep your payments organized. Bankruptcy is often a way of simplifying your debts. As mentioned above, a Chapter 13 bankruptcy lets you pay your debts with a payment plan.
The plan involves you making regular payments to a trustee. Instead of you paying off multiple people at different times, you only have one person to pay at one time. You don’t need to worry about forgetting to pay someone and being deeper in debt.
Who Can Benefit from Bankruptcy?
Bankruptcy is not an option for everyone. It’s only an option for individuals with a certain amount of debt. To file, you need to be able to meet all of the basic requirements. This means providing records of your financial situation, like pay stubs and tax returns.
If you want to know about your options for bankruptcy, you should speak with one of the experienced Washington bankruptcy lawyers. They can determine whether or not you are eligible, find out which type of bankruptcy is best for you, and take you through the process.