It's only natural to delay something as major as bankruptcy. You may know that your debt situation is not improving and yet you hesitate to make the move. To learn more about why now is better than later when it comes to bankruptcy, read on.
You can stop punitive actions
Once creditors begin taking action against you, things can get bad. Both the original creditor and the collection agencies can make a debtor's life miserable by contacting them repeatedly. However, things can get worse when the debt is not paid. Debtors can be taken to court and a judgment will be handed down against them. Then, more problems will follow. The creditor can take money from the debtor's paycheck and place liens on their property. Filing bankruptcy, however, puts an immediate end to all of that. The immediate stay means all creditor actions and contact must stop.
You can delay foreclosures
Almost nothing is worse than losing a place to live. If you are behind on your mortgage, however, the lender could begin foreclosure proceedings against you. Once you file bankruptcy, the proceedings are halted. However, the lender may be allowed to proceed with the foreclosure at some point, often in a few months. The temporary reprieve, though, allows some debtors to make payment arrangements and get their mortgage caught up.
You can stop vehicle repossessions
Auto loan balances that remain unpaid can prompt repossession actions. If your vehicle has already been repossessed, it's too late to act. However, once you file for bankruptcy, a temporary freeze on those types of actions goes into effect.
After your bankruptcy has been filed, ask your lawyer about reaffirming your auto loan debt. This means that you agree to continue paying the debt as previously agreed. You must, however, not be behind at the time you perform the reaffirmation. Use the extra money you have been spending on credit card payments to catch up on your auto loan so that you can keep your vehicle.
Your budget looks immediately better
From the moment you are sure you are filing bankruptcy; you can stop paying certain bills. In most cases, payments to your credit cards, personal loans, medical debts, and payday loans can stop as soon as you speak to a lawyer. Re-do your budget and notice that you now have more money to spend on food, housing, fuel, clothing, and more. Get used to that budget – it's one of the main benefits of the financial fresh start you can expect from bankruptcy.
For more information, contact a law office near you.
