Bankruptcy is quite often misunderstood. It has been stigmatized yet can provide a positive solution for someone in a difficult financial situation. There are many bankruptcy options out there, which a firm such as Oaktree Law can help you choose and file for without risking property loss or a backlash from your creditors. Having large amounts of debt can lead to foreclosure, wage garnishment, and other effects, but bankruptcy solutions can have many benefits in the short term and over the long run.
1. Debt Relief
Under federal bankruptcy laws, debt can be discharged, meaning your obligation to repay it goes away. If you file Chapter 7 bankruptcy and owe credit card debt, payday loans, medical debt, and other unsecured loans, your legal obligation to pay them is eliminated after about three months of your declaration of bankruptcy. Even some secured loans and taxes can be discharged. However, non-dischargeable debts including child support, alimony, student loans, and fines for illegal activities must still be paid.
How is a debtor’s responsibility to repay balances eliminated? The reason is their assets are sold and distributed through a liquidation process. Once they are, unpaid balances are considered fulfilled. You can therefore have a fresh start and an opportunity to refocus on how you manage your finances in the future.
2. Automatic Stay on Collections Efforts
Once you declare bankruptcy, federal law prohibits creditors from calling or contacting you in any way to collect your debt. That means garnishments, foreclosure, and lawsuits automatically stop. You’re not completely freed of responsibility. But bankruptcy does give you time to regain your financial footing and develop a more effective approach to repaying the debts you are still responsible for. It’s an opportunity rebuild your credit as well.
3. Property and Asset Protection
Despite a common belief that bankruptcy strips all personal possessions, this is not true. The bankruptcy code exempts housing, vehicles, land, furniture, and clothing from liquidation, while your retirement account, life insurance policy, and much of your earned wages should be protected as well. For the most part, exempted property is determined by state law, but some federal laws apply, so consult with our Los Angeles bankruptcy attorney to determine how the exemption process is managed in your jurisdiction.
Consider Your Options Wisely
Bankruptcy has many benefits. However, a bankruptcy filing will remain on your credit report for 10 years and make it more difficult to secure a loan. Even if loans or credit cards can be secured, you’ll likely see higher interest rates.
There are various fees associated with filing bankruptcy as well. These include filing, bankruptcy trustee, and attorney fees as well as credit counseling fees. The process isn’t cheap, but it does stop harassing phone calls and put an automatic stay on collections actions, so you can take a deep breath and reassess your future financial strategy.
Consult with Oaktree Law Today
No matter how tough your financial situation is, our Los Angeles bankruptcy attorneys will work with you directly and discuss your bankruptcy options. We can eliminate some of the risks associated with filing bankruptcy and help you feel more secure about your options. To speak to someone with your best interests in mind, and to start with a free consultation, call our Los Angeles bankruptcy attorney at 562-219-2979 or request a free evaluation on our website today.