The Benefits of Bankruptcy Filings & What To Avoid Along The Way

In this article, you can discover:

  • Answers to your top questions about the benefits of bankruptcy.
  • What bankruptcy alternatives you should avoid when exploring your options.
  • The number one thing you can do to prepare for bankruptcy – before you ever file

Will Filing For Bankruptcy Also Stop Collection Calls And Creditor Harassment?

Bankruptcy will unequivocally stop collection calls and creditor harassment in its tracks. Once a bankruptcy is filed, an automatic stay goes into place immediately.

This stay means that creditors can no longer take collection activity against you –  and that they cannot harass you, send correspondence to you, or call you, your employer, or family members – everything has to go through your attorney and the bankruptcy court process.

Can I Get Rid Of My Medical Bills By Filing Bankruptcy?

Unfortunately, the rising cost of health care means that more Americans fall into medical debt every year. This leads many to consider bankruptcy as a final option to make a full recovery after an illness or accident.

Under bankruptcy law, medical bills are considered a form of unsecured debt that can be either:

  • Completely discharged in a Chapter 7 filing, meaning that there is no longer any obligation to make a payment. Or,
  • Paid on a Pro Rata basis in a Chapter 13 filing. (This will depend on whether there is money available in Chapter 13 to pay the unsecured medical debt.)

Is Student Loan Debt Dischargeable In A Bankruptcy?

Student debt is not dischargeable under bankruptcy law. The only exception to this rule is for those who have a medical disability that precludes them from being able to pay their obligations.

It should also be noted: The medical exception for dischargeable student debt is very limited and it is often costly to take the actions that would make a debtor free from their student loan obligations.

What Alternatives To Bankruptcy Should Debtors Steer Clear Of In Order To Get Out Of Debt?

Debt settlement is often one of the worst things that a person can pursue when they are in financial difficulty. Why?  Because of the way these companies operate…

Debt settlement companies spend enormous amounts of money on advertising their services across the country. You’ve seen their commercials – on television, on the radio, and all over the internet. They promise if you just call, you will see your debt significantly reduced. They promise, “We will settle these debts for you.”

But what actually happens to your money when you work with a debt settlement company? These enterprises work by getting you, the client, to send them money on a monthly basis which they include in a “trust account” of sorts. After deducting their fees, this money is then held until they believe they have enough cash on hand to make a settlement offer.

The catch is that this service in no way stops collection activity from happening – which means that creditors are still able to contact, harass and/or file suit against you while they try to collect their debt. Meanwhile, it does you no good to tell your creditors that you are working with a debt settlement company because they just don’t care. They will continue to harass you, continue to report to credit bureaus unfavorably, and continue in their efforts to collect.

For these reasons, it becomes apparent why debt settlement companies seem too good to be true – it’s because they are. It’s amazing how many people we see each year who have signed up for debt settlement only to find themselves so disappointed at the result.

Other “quick fix” solutions that only lead to more trouble can include:

  • Predatory Lenders
  • Payday Loan Companies
  • Home Equity Loans
  • And more..

A final note on this topic: For the longest time, the state of Texas did not allow home equity loans. When this changed, it immediately jeopardized debtors looking to pay their unsecured debt in the form of credit cards, medical bills, payday loans, and more.

Why? Because it raises the stakes of any situation you may be facing by making your unsecured debt secured and placing your own home in jeopardy. Above many of the so-called “bankruptcy alternatives” listed in this article, I highly encourage people to never take that sort of action without first discussing your options with a bankruptcy attorney.

What Should I Do Prior To Filing For Bankruptcy?

Once you have exhausted other options, the best course of action is to contact a local bankruptcy attorney to determine if a bankruptcy is in your best interest.

This decision is not something that should be made lightly, and you should be well informed about the consequences. With so much on the line, there’s no reason to move forward without the insight of a knowledgeable bankruptcy attorney.

Our office will support you through each step of the process and direct you in the course of action that you might need to accomplish before the actual filing.

For more information on the Automatic Stay To Stop Creditor Harassment, an initial consultation is your next step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.

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