One of the primary reasons individuals declare bankruptcy is to halt credit collection efforts. Filing for bankruptcy will halt wage garnishments, repossessed vehicles, and foreclosures. When assets are in jeopardy of being liquidated, bankruptcy can provide a means to retain ownership while working toward debt resolution. When you file for bankruptcy, a stay order is automatically issued, preventing creditors from taking further action against you. This order halts all garnishments, collections, repossessions, and foreclosures immediately.
Once a debtor has filed for bankruptcy, creditors cannot legally collect a debt outside of a court-approved arrangement. Additionally, creditors must adhere to the court-ordered debt relief plan. Filing for bankruptcy essentially halts debt collection long enough for you to formulate a plan and resolve your debts without the risk of losing secured debt assets. The bankruptcy process is essentially a legal medium that moderates your interactions with creditors and assists you in negotiating a debt relief plan that fits your financial circumstances.
Despite the fact that debt relief is the primary objective of bankruptcy, there are additional benefits along the way. Even if you file for Chapter 13 bankruptcy, your repayment plan will be simpler than non-bankruptcy debt resolution. In a Chapter 13 repayment plan, your debts will be repaid over three to five years through a series of smaller installments. In many instances, the account's interest fees and delinquency fees will be suspended. Outside of bankruptcy, creditors rarely suspend interest or waive penalty fees.
Another benefit of bankruptcy is financial education. You are required to complete a credit counseling course as part of the bankruptcy process. Although these courses are available to anyone seeking to improve their money management skills, the majority of people only utilize them when absolutely necessary. The skills acquired in a credit counseling course are invaluable and can teach you the habits necessary for a secure financial future.""
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