Bankruptcy is designed to provide unique help in a number of ways, but a primary benefit of bankruptcy for many filers is the potential to eliminate their debts.
Filing bankruptcy often acts as a financial cleanser, scrubbing unsightly debts from people's records and allowing them to start fresh with a clean financial slate.
In addition to debt relief, any discussion of how bankruptcy helps people in debt would be incomplete without referring to bankruptcy's ability to stop home foreclosure.
As banks and other lenders force more and more Americans out of their homes, bankruptcy's potential to prevent foreclosure has become increasingly important.
There are two common types of personal bankruptcy, Chapter 7 and Chapter 13. For people trying to stop home foreclosure, Chapter 13 may be the more powerful choice.
In Chapter 13 bankruptcy, a filer works with the bankruptcy court to create an affordable debt repayment plan. Under this repayment plan, filers pay off debts, including mortgage debts, to their creditors over a course of three to five years.
That, in a nutshell, is how Chapter 13 helps eliminate debt. Here's how Chapter 13 could help stop home foreclosure:
As you can see from the information listed above, there are several potential ways that filing bankruptcy could help stop foreclosure.
If your concerns are unrelated to foreclosure, and instead focused on solving your unsecured debt problems, Chapter 7 may be a better fit.
Through Chapter 7 bankruptcy, filers may be able to eliminate some or all of their unsecured debts, including credit card bills, medical debt, and some personal loans. In addition, Chapter 7 also provides the benefits of the automatic stay.
While the automatic stay can stop foreclosure, it may also:
Learn more about how bankruptcy might help you by speaking with a local bankruptcy attorney today. To connect with a lawyer in your area for a free consultation, fill out the brief form below.