How Bankruptcy Affects Your Creditors

If you are feeling overwhelmed with your debt and financial obligations, you are not alone. Life’s challenges can make it difficult to keep up with economic demands. If you have experienced a job loss or pay cut, or if you have endured significant medical expenses or other hardships, you may not be able to pay all your bills. In this situation, bankruptcy may be an option to better manage your day-to-day finances and get a fresh start. You should take this step seriously and consider the implications it will have. However, there are advantages to filing when it comes to your creditors.

They Won’t Go Away

If you are burdened with a load of massive debt, the last thing you should do is ignore the phone calls, letters and email from your creditors. Credit card companies, retail representatives and health care facilities will not simply forgive debts and forget about you if you try to hide from what you owe. Doing this will only result in late fees and damage to your credit. You could eventually face legal action if you don’t communicate with the creditors and make an effort to pay or discuss payment arrangements.

With Bankruptcy, the Calls Will Stop

One of the benefits of filing bankruptcy is that all creditors must stop their collections efforts. Once the bankruptcy process begins, creditors are required to stop contacting you about making payments. They must stop all efforts of foreclosing properties, turning off utilities, filing lawsuits and repossessing your belongings.

Court Orders

As the bankruptcy proceedings begin, the court will issue and order that all creditors must stop attempting to cease any property or assets you owe. For example, creditors Cannot garnish your wages, freeze your bank accounts or take money from them, or take your home or car from you until a judge lifts that order.

Discharge of Debts

Filing for bankruptcy and will not automatically eliminate all of your debt. Some debts such as student loans, income taxes and child support payments must still be paid. However, bankruptcy allows you to rework your debt payments, allowing you to restructure the amount you pay. You might even be able to wipe out all consumer debt in some situations.

Filing for bankruptcy may seem embarrassing or scary, but there are benefits to doing this. You can have peace of mind and enjoy the chance to start over financially if you make this decision. To ask questions about your case, set up a consultation with a chapter 13 bankruptcy lawyer, like the attorneys at Kamper & Estrada, PLLC as soon as possible.