Benefits of Bankruptcy When You Face a Tough Financial Situation

Like any financial or legal maneuver, bankruptcy is useful in certain situations. If you're in tough financial straits, here are some benefits that filing for bankruptcy offers.

Stop Creditors' Collections Calls

Phone calls from creditors who want to collect on an outstanding debt that you owe can quickly become annoying, as creditors frequently call multiple times a day. Unless you submit a written cease and desist letter, creditors are legally allowed to call you so long as they don't cause your phone to ring continuously in order to annoy you. They are legally allowed to call:

• You multiple times per week or day
• You anytime between 8:00 a.m. and 9:00 p.m.
• Your home or cell phone
• Your place of work
• Your relatives (to get your contact information only)

One of the first things you'll notice when you file bankruptcy is that all of these phone calls immediately stop. As soon as creditors find out you've taken debts to bankruptcy court, creditors are legally required to cease all collections attempts. They also have little incentive to call you illegally, as all of your finances are now overseen by the court.

In stopping all collectors' phone calls, bankruptcy can bring some peace even before the process is completely over. You'll be able to sleep during the day better if you work second or third shifts, and children won't be woken up during naptime. You'll also have an easier time concentrating at work since you don't need to worry about an interruption from a collector's call.

Delay Foreclosure and Repossession

If your past-due debts include a home mortgage or car loan, you may soon face foreclosure on your house or repossession of your car.

Both of these are devastating, for they not only have significant financial effects but make even the basic things like lodging and transportation a challenge. When you're struggling to pay bills, the last thing you want is to spend time searching for new housing or not have transportation to get to work in an immediate emergency situation.

Should you file chapter 13 bankruptcy, the bankruptcy will immediately halt any foreclosure or repossession that's in process the moment you file. Any creditor who has started one of these processes legally can't take your property for a past-due credit while your bankruptcy is underway.

Even if you ultimately do need to sell your home or car, any delay in foreclosure or repossession can prove valuable. You don't have to immediately surrender your home or car, which gives you more time to find alternative lodging or transportation as you're able to. You also may be able to sell your home or car for more than the bank would give you for the asset.

Protect Your Most Important Assets

Bankruptcy laws govern what assets are used to pay off your debts with, and the laws allow you to protect certain, particularly important assets. While laws vary from state to state, you usually can exempt the following items:

• Inexpensive vehicle
• Primary residence
• Clothes
• Retirement accounts
• Burial plots

Whatever the law where you file allows you to exempt is stuff that you don't have to sell or hand over to the trustee of your bankruptcy case.

An attorney can explain exactly what your state allows you to exempt, and they can review your possessions to make sure they aren't inordinately valuable. Items that are extremely valuable might not fully qualify for an exemption even if an inexpensive version is allowed. For example, you might be able to keep a $10,000 car but not an $85,000 one.

If you need to file bankruptcy and want help with debt relief, contact Charles J Schneider PC.