Calls for Collection Purposes
The automatic stay is one of the most immediate effects of filing for bankruptcy. A bankruptcy automatic stay prevents creditors from contacting you during the debt negotiation phase. This means that creditors are prohibited by law from contacting you by phone, mail, or in person as long as you are in bankruptcy. In addition, creditors who violate this order may face prosecution and severe consequences. Many individuals find that alleviation from creditors grants them the tranquility necessary to concentrate on their debt reduction strategy.
Debt relief is the most apparent benefit of bankruptcy. There are two categories of debt relief available to bankruptcy filers. A Chapter 7 bankruptcy can wipe out almost all of your unsecured debts swiftly and at minimal expense. A Chapter 13 bankruptcy can wipe out your unsecured and secured debts by creating a repayment plan that best fits your budget. By reimbursing their debts under Chapter 13, individuals discover that their secured debt assets are better protected.
Numerous individuals fear losing their assets, such as their residence or car. Thankfully, bankruptcy can suspend the process of foreclosure or repossession. When a bankruptcy petition is filed, all creditor collection and seizure actions must cease until the bankruptcy plan is finalized. Assets in a Chapter 7 bankruptcy case may be subject to liquidation, but you are typically given more time to devise a plan to pay for and retain the asset when you file for bankruptcy. Chapter 13 can provide a nearly 100 percent guarantee that your assets will be protected, provided you make your Chapter 13 payments on time.
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