Every individual’s financial condition is different from each other. Struggling with debt and financial problems is complicated. Choosing whether to file for bankruptcy and learning how to file is likewise not an easy decision to make. To decide if bankruptcy is the right option for you, you should consult with Washington & Oregon bankruptcy attorneys.
A bankruptcy filing is a legal proceeding wherein a debtor files a petition for bankruptcy to repay lenders. Filing bankruptcy allows you to have a fresh start with your finances. It is highly recommended to hire a bankruptcy attorney to prevent legal issues during the bankruptcy process. Before filing for bankruptcy, understanding the basics of bankruptcy law is important to have a successful bankruptcy filing.
What are the benefits of filing a bankruptcy petition?
Automatic stay
One of the advantages you get when you file for bankruptcy is the automatic stay. Once the petition in bankruptcy has been approved by the bankruptcy court, an automatic stay will take place. It prohibits any collection activities from creditors and lenders. This will also stop wage garnishment, foreclosure, phone calls, emails, and repossession. If a creditor continues to demand payment from you, your Portland bankruptcy lawyer may file a contempt of court action against these debt collectors. You may ask the bankruptcy court for an extension of the previous automatic stay if you have filed bankruptcy within the last year. However, an automatic stay will not take effect until the court issues an explicit order if you have filed multiple times last year.
Eliminating dischargeable debts
Debtors will be entitled to wipe out their obligation to pay off dischargeable debts. These debts are the ones that may be discharged in a bankruptcy proceeding. Unsecured debts such as credit card bills, medical bills, and personal loans are common examples.
Bankruptcy exemptions
Exemptions from bankruptcy allow debtors to keep their homes after filing for bankruptcy. These exemptions are crucial in both bankruptcy cases under Chapter 7 (liquidation bankruptcy) and Chapter 13 (reorganization bankruptcy).
Rebuilding your credit score
While fears of a ruined credit report deter a lot of individuals from filing for bankruptcy (because a filing stays for seven to ten years), a lot of debtors find that after a bankruptcy filing, their credit scores eventually improve. If an individual’s dischargeable debts have been discharged, they can start over and gradually rebuild their credit score.
Timing is crucial when filing for bankruptcy.
Filing a bankruptcy petition that is not in your best interest or filing for bankruptcy too soon may result in a loss of assets that you would have been able to secure (or a situation that could otherwise worsen a bad financial circumstance). This can also happen if you filed for bankruptcy under Chapter 7 instead of Chapter 13. This is why consulting credible Portland Oregon bankruptcy attorneys is important. They can help you decide on which among the types of bankruptcy is the best option for you.
Bankruptcy filings may also have potential consequences. Throughout the bankruptcy procedure, an experienced and trusted Portland Oregon bankruptcy lawyer will assist you.
- When you apply for bankruptcy, several credit card companies immediately terminate any cards you have. Following your bankruptcy filing, you will almost certainly receive several offers to apply for an unsecured credit card. While this could help in rebuilding your credit score, they typically come with a high-interest rate and annual fee.
- Filing bankruptcy immediately affects your credit report. A bankruptcy Chapter 7 stays in the report for ten years and seven years for a Chapter 13 bankruptcy declaration.
- Obtaining a mortgage or loan is difficult. For several years, filing for bankruptcy could make it hard to obtain another mortgage or loan.
- Exemptions do not always apply to both personal assets and real estate. It means that the court may seize and sell some of your assets to pay back your creditors.
- Tax refunds are denied. A bankruptcy filing will likely result in the denial of state, local, and federal tax refunds.
- The stigma associated with employment and housing. Any prospective employers and landlords will inquire regarding any previous bankruptcy filing, which could adversely affect your prospects for both.
- Not all types of debts can be wiped out. Certain types of debts are non-dischargeable when you file bankruptcy. Secured debt, child support, alimony, student loan debt, criminal fines and restitution, tax debt, and other debts accrued by fraud are all examples of debts that are not dischargeable.
There are variations between the benefits and drawbacks of a bankruptcy filing. Most of it will depend on an individual’s financial condition and there are a lot of factors that may influence these situations. For assistance and basic bankruptcy exemption, contact our Portland Oregon bankruptcy attorneys at Northwest Debt Relief Law Firm for a free consultation.
