28 Aug 5 Positive Things That Filing Bankruptcy Can Do For You
As a Consumer Bankruptcy Attorney, people often ask about the pros and cons of filing for bankruptcy protection. I tell them simply that I can name 5 positive things right off the top of my head that bankruptcy can do. Of course there are more but I wouldn’t want their eyes to glaze over when we start talking about bankruptcy. My list is not exclusive, and it would be more relevant here in Southwest Florida than other places, but I hope you will see some of the same benefits that I see:
1. The Automatic Stay – Hands down this is one of the biggest benefits of filing for bankruptcy protection. The automatic stay immediately stops most creditors and collection actions in their tracks. In Florida, the filing of a bankruptcy petition creates a bankruptcy estate and the automatic stay immediately goes into effect. So, many of my clients file bankruptcy during a pending collection lawsuit (including foreclosures) to get a moment to catch their breath.
2. Debt Relief – One of the goals of a bankruptcy filing is to obtain a Discharge of your debts. The Discharge will operate as an injunction to prevent a creditor or any other debt collector from attempting to collect on any dischargeable debt included in the bankruptcy? Many of my colleagues have written about the Discharge, so I will not drone on about how wonderful the Discharge can be. All I want you to remember is that it is one of the most positive things about filing for bankruptcy protection.
3. Stripping a Second Mortgage from your Homestead – This process used to be reserved for Chapter 13 cases. But recently, a very interesting decision by the 11th Circuit Court of Appeals paved the way for stripping second mortgages in Chapter 7 as well.
4. Repay Creditors In a Reasonable Manner – Chapter 13 bankruptcy allows individual debtors the opportunity to repay all or a portion of their debts in a reasonable fashion. Usually, the payment is equal to the debtor’s disposable monthly income. This amount will vary between jurisdictions, so it is important to understand how this amount will be determined before filing for bankruptcy.
5. Financial Planning – Bankruptcy is really financial planning 101. Now that you have filed for bankruptcy protection, I’m going to break the news to you. This is only the beginning of your financial education. You have so much more to learn. I challenge you to read a book a month about finances and how money really works for you or against you. You have the right to be financially independent and bankruptcy can put you on the correct path. I cannot tell you how many of my clients are on the road to financial success not that they put the problems of the past behind them.
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