dvantages Of Filing Bankruptcy
For people facing very serious financial difficulties, filing bankruptcy is an option with many advantages. Probably the two biggest advantages are that filing a bankruptcy provides a "discharge" of debts and that filing bankruptcy triggers the "automatic stay".
A "discharge" in bankruptcy releases the debtor from personal liability for certain debts, thus enabling the debtor to receive a "fresh start". I refer to the discharge paper that is received from the court as "the golden ticket that shows you don’t owe the bills anymore". Most debtors’ primary purpose in filing a bankruptcy is to receive a discharge.
There are, however, limitations to the discharge. For example, only individuals (as opposed to corporations or partnerships) can receive a discharge. Also, some debts cannot be discharged and will still be owed even after a bankruptcy is over, such as liens against property, child and spousal support, some taxes owed, and most student loans. The good news, though, is that, except for a few exceptions, every debt you owe will be "discharged", including medical bills, old collections, credit card bills, and even loans on repossessed cars.
Another advantage to filing bankruptcy is that it triggers what is known as the "automatic stay". So what is the automatic stay? Well, I like to explain it like this: Remember the game Red light-Green light? Well, before you file bankruptcy, the people you owe have a "green light". They are chasing towards you, filing law suits, calling you on the phone, attaching your wages, even foreclosing on your home. When you file bankruptcy, the "automatic stay" is the Red light that stops ALL of that. Creditors are not allowed to call you or try to collect money from you; they are not allowed to proceed with foreclosures, garnishments, or any other collection procedure during the bankruptcy proceedings. Best of all, assuming you receive your discharge, you will never hear from those collectors again!
Courtesy of Amy Spencer-Martyn
Spencer-Martyn Law Offices
Redding, CA 96002
This information in this article is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.