What Are the Benefits of Declaring Bankruptcy
Written by Robert DeMarco
Bankruptcy is a word that carries a lot of weight in the financial world. However, it doesn’t have to be scary! When you declare bankruptcy, it can be one of the most difficult decisions that you will ever have to make. However, once you go through this process and come out on the other side, many benefits await you. In this blog post, we’ll discuss some of the top benefits that declaring bankruptcy in Plano, TX, has to offer and why more people should seriously consider taking that step if they are struggling financially.
What Is Bankruptcy?
Bankruptcy is a legal process that wipes out your debts when you can’t afford to pay them. It’s one option for people who are in financial distress and have few other options left. Filing for bankruptcy will stop most collection efforts, give you protection from lawsuits, stay pending court actions like foreclosures or repossessions. At the same time, the case moves forward and provides some breathing room so you can get back on solid ground financially.
Who Can File for Bankruptcy?
As you may have guessed, bankruptcy is for people with too many debts and not enough money to pay them. The law provides a safety net when people can’t repay their creditors what they owe, allowing the person to discharge some or all of their debt. It’s often considered an extreme option because it affects your prospects in terms of credit ratings and being publicly disclosed on court documents and websites like Lexis Nexis. But for those who need to do so, it is a valuable tool.
The Benefits of Declaring Bankruptcy
You must understand this process before moving forward with bankruptcy proceedings. Bankruptcy is never easy, but there are many benefits associated with it.
First of all, declaring Chapter 13 bankruptcy will help people who have lower incomes keep more money each month while they repay their debts over time—plus creditors can’t call or come knocking at your door demanding payment during these proceedings! This could be great for somebody who wants some relief from high-interest credit card rates and late fees—especially if those missed payments often happen enough to warrant a Chapter 13 filing.
Plus, Chapter 11 bankruptcy offers additional benefits like the automatic stay from creditors and getting out of debt sooner! This is a unique process that can be used by anyone who has had to struggle with high-interest rates on credit cards or other loans. One thing you’ll want to keep in mind before declaring bankruptcy is how this will affect your credit score—which could impact things such as whether or not you’re able to buy a house one day or qualify for new car financing at an affordable rate.
Declaring bankruptcy can help people deal with their debts by eliminating them and providing potential relief from high interest rates associated with certain types of loans.
Other benefits are:
Stops debt collectors from calling – Debt collectors are legally obligated to stop calling once you declare bankruptcy
You can keep your property – You don’t have to give up any of your belongings, including vehicles or home equity.
You get a fresh start on life – With a clean slate, you will be able to apply for credit cards and loans without the fear of being rejected because of past debt.
No one is above the law – Even if you’re rich and famous, declaring bankruptcy will protect both people that know they won’t pay their bills as well as those who believe they’ll never fall into trouble with money again.
Allows debts to be repaid over time instead of all at once – A chapter 13 payment plan will enable individuals to repay their debts through monthly payments, so it doesn’t feel like a weight on their shoulders.
Gets rid of credit card debt – When you have to declare bankruptcy, your debts will be discharged, and those pesky interest rates that were so high are gone for good.
Protects retirement accounts– If you’re worried about losing the funds in your 401(k) or IRA account when declaring bankruptcy, don’t worry! It’s protected under federal law by Chapter 13 Bankruptcy proceedings.
Allows individuals with bad credit scores to get back on track. The automatic stay provisions mean that creditors can no longer take legal action against an individual who has filed for bankruptcy protection.
Your dignity is safe – Just because someone files for chapter 11 doesn’t mean they’re hurting financially–it simply means they can’t afford to repay their debts.
Once the bankruptcy process is complete, individuals are in a better position to start rebuilding, and they can also take out loans with reduced interest rates.
Note: You must first exhaust all of your other options before deciding that declaring bankruptcy might be beneficial for you.
What is Chapter 7?
Chapter 7 bankruptcy is a process where you’ll have to liquidate any assets that may be available to repay some of your outstanding debt. You can use your retirement accounts, properties, savings, and even a vehicle to do this.
When Should You Consider Declaring Bankruptcy?
One question that may come to mind is, “When should you consider declaring bankruptcy?” While there are many levels of severity and complex considerations when it comes to this topic, the answer can often be found in simply asking yourself a straightforward question.
Individuals and families need to plan if they find themselves struggling financially before the situation becomes unmanageable. For some people, filing for personal bankruptcy might seem like their only option – but before taking such drastic measures, it pays off to examine all other possibilities first.
Bankruptcy could potentially wipe out your savings, retirement funds or even liquidate any assets you have been saving up over time. It’s also possible that once filed for bankruptcy protection; it will be harder to obtain a loan or credit card in the future.
So before you decide, it’s good to know all of your options. Here are some things to consider:
-Can I avoid bankruptcy by reducing my monthly expenses? Is there anything that can be sold for cash? Can I get an income tax extension and delay paying taxes owed until after next year’s return is due?
-Should I sell off items from around the house such as furniture, electronics, or appliances? Can any family members temporarily help out with living costs so that we can pay our bills on time moving forward?
-Do I need professional debt assistance like negotiating reduced payment plans, consolidating debts into one lower amount, or filing for bankruptcy protection?
It’s essential that you know the rules about what type of debts can be erased and which ones remain in place after declaring bankruptcy. You should consult with a bankruptcy attorney before deciding on filing for bankruptcy. The decision is not to take lightly, but sometimes it makes sense, especially if your finances are overwhelming due to debt obligations.
There are several reasons that will impact your decision to declare bankruptcy, such as:
- What type of debt do you have, and how much money is available.
- If you’re in danger of losing your home or vehicle because of unpaid debts, then filing for bankruptcy may be the right move.
- When faced with wage garnishment from creditors who want their due payments, they’ll get far less than if they had been paid directly by clients or customers.
It’s often wiser to file bankruptcy instead of paying back loans over time when many people can’t afford loan payments stretching on for years. Also, after declaring bankruptcy, some people may be able to get a fresh financial start.
Do You Need Bankruptcy Lawyers in Plano, Texas?
If you’re considering declaring bankruptcy, the benefits are plenty. Bankruptcy is a difficult decision to make, but it can be the best course of action in some cases. The key to determining whether or not it may be suitable for your circumstances is understanding what’s in store if you decide to take that step and how it will affect your finances moving forward.
If you are struggling with unmanageable debt and don’t see an end in sight, bankruptcy may help alleviate your stress and financial burdens while giving you time to get back on track financially. You don’t want to go into this process blindly—contact Demarco Mitchell, PLLC, today for more information about how we can guide you through this process as smoothly as possible. We will work closely with you every step of the way so that filing for bankruptcy is painless – no matter what your circumstances are or how much money you owe!
DeMarco Mitchell, PLLC is a law firm that specializes in Bankruptcy Law in Plano, TX, and the surrounding areas. Calling our office will allow you to speak with one of our attorneys about your case today!
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