Is Bankruptcy right for me?
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Questions to ask to better understand bankruptcy:
If you’re asking yourself, “Is bankruptcy right for me?” you first need to understand how bankruptcy works and what it can and cannot do for you. As a debt relief option for individuals, farmers, large and small business, bankruptcy offers different several different types of relief. However, in general, bankruptcy may make it possible for financially distressed individuals and businesses to:
Get a fresh financial start.
Bankruptcy discharges liability for most debts with no further legal obligation.
Stop constant creditor harassment.
The filing of a bankruptcy places an immediate stay on creditor action against you or your property. Creditors are legally forbidden from contacting you and from taking action against any of your property, including wages or bank accounts, until told otherwise by the court.
Prevent foreclosure or repossession.
Through bankruptcy, it may be possible to stop the foreclosure sale of your house, and allow you to keep your home while catching up on missed payments. Likewise, bankruptcy can stop or reverse the repossession of property.
Find tax relief.
Bankruptcy’s automatic stay provides immediate protection from tax collection and can also provide tax relief. The type and amount of tax relief under bankruptcy will depend on the kind of tax, the age of the tax, if a return was filed and the kind of bankruptcy case you file. Often, taxes filed more than three years before bankruptcy can be discharged in full.
Remove liens from property.
Liens against personal property resulting from judgements or pledging certain types of collateral may be removed in certain situations.
Protect you from lawsuits.
Filing for bankruptcy will stop almost all types of litigation at all levels. Even if a lawsuit or judgment has already been handed down, bankruptcy will often result in a discharge of the debt.
Stop garnishment and lower payments.
Through bankruptcy, it is possible to stop wage garnishment and in some cases possible to lower the payments on secured debts.
Provide Court Supervised Restructuring for Businesses.
If your business is burdened by excessive debt, filing for bankruptcy protection can provide the relief you need to effectively restructure, pay your creditors some, or all, of what you owe, and get back on your feet so you can start making money again.
When is Bankruptcy Not Right for Me?
While bankruptcy offers many benefits, it is not the solution for every financial problem. Bankruptcy cannot:
Discharge debts related to child support, alimony, some student loans and taxes, court fines and other court-ordered payments.
Protect all cosigners.
Eliminate certain rights of secured creditors. While a creditor may be forced to accept payments, a debtor generally cannot keep the collateral unless the debtor continues to pay the debt.
Discharge debts incurred after filing for bankruptcy.
Discharge debts resulting from certain types of fraud.
Protect property that has been sold or transferred under certain conditions.