When your debts are piled high and creditors are knocking at your door, there is very little you can do to get rid of these things if you do not have the money to pay them in full. There is one option that you should consider, which is filing bankruptcy. Bankruptcy may not be something you want to file, but it might be the only option you have if you are going through a severe financial hardship. By filing bankruptcy, you can avoid major problems, including the following three things.
Getting Sued
One of the first steps a creditor might take to collect money you owe is suing you. Getting sued is never a fun event, primarily because it usually requires going to court. If you go to court and owe the debt, it is likely the court will place a judgment on the debt. This means you will have to pay it to avoid further problems. In addition to the amount you owe on the debt, the court may add in other fees too, which means you could potentially owe a lot more for the debt after your court hearing than you owed before it.
If a creditor does take you to court and the result is a judgement against you, this debt can typically be included in bankruptcy, if you choose to file. Most judgements for debts can be discharged through a Chapter 7 bankruptcy, but you could avoid the entire hassle of going to court by filing bankruptcy before a creditor sues you.
Getting Your Wages Garnished
When you owe money for certain types of debts, creditors may have the right to garnish your wages. Imagine if you received your next paycheck and discovered that it is a lot less than it should have been because of a wage garnishment. Stopping a creditor from pursuing wage garnishment is not an easy task, and stopping wage garnishment once it is occurring can be almost impossible.
Bankruptcy can help you with this though. When you file bankruptcy, creditors may be required to legally stop garnishing your wages. This occurs because bankruptcy offers something called an automatic stay. An automatic stay stops all types of collections from occurring while the case is being reviewed. If the bankruptcy court grants you a discharge for your debts, the creditors that were garnishing your wages will be prohibited from garnishing them for the debts you owed. This is because bankruptcy forgives debts, and this eliminates the rights of the creditors you owe.
Losing Your Assets
Filing for bankruptcy is also a great way to protect your assets. If you file Chapter 7, there is a chance you may have to surrender certain assets, but not always. If you own a house and are not behind on the payments, the bankruptcy trustee will let you keep the house in Chapter 7 bankruptcy.
If you are behind on your house payments, you could avoid losing your house by either:
- Coming up with the money you owe for past due payments and fees
- Filing Chapter 13 bankruptcy instead of Chapter 7, even if you have already received foreclosure documents.
In addition, you could avoid having your cars repossessed by filing bankruptcy, and you could avoid losing any other major assets you have.
Bankruptcy is not always the best way to protect yourself, but it can be in many cases. If you are tired of the daily phone calls from creditors and want to stop any further action from them, filing for bankruptcy might be your only option. If you are interested in learning more about bankruptcy options, contact a bankruptcy lawyer like Wade Bettis, J.D., Ph.D., PC.
