Bankruptcy Questions Answered: Should I File for Bankruptcy? – Advantages and Benefits

We’ve already discussed some of the top reasons that people decide on bankruptcy, but could there be ways that a bankruptcy filing could be strategic? The short answer: yes! In this article we’ll get into some of the immediate and long term advantages and benefits that a bankruptcy attorney can help you to take advantage of. Read on to learn more.

Warding Off Threats

FIling for bankruptcy–whether chapter 7, 11, or 13–will always put an immediate end to threatening calls from creditors. The automatic stay goes into effect as soon as you’ve filed, and this legal move gives you some room to breathe as you consider your financial situation. Without debt collectors, banks, and other creditors breathing down your neck, you can spend valuable time working with your bankruptcy attorney to chart a path towards financial recovery.

Besides stopping the calls and threats, the automatic stay also protects debtors against legal action that creditors might be eager to impose. This could include seizing property, like foreclosing on a home or repossessing a vehicle. If you already know that these actions are around the corner, filing for bankruptcy is a sure way to protect yourself and your assets. Personal property is also protected against seizure and liquidation until your bankruptcy lawyer and trustee make final decisions. In the meantime, if a creditor does go against the court and try to collect debt, they could be cited for contempt of court or even ordered to pay damages. This applies to utilities also–a provider cannot shut off service once a bankruptcy case is filed.

Another key protection comes in the form of job security. If your employer is threatening to terminate your employment, the government ensures that they can’t fire you solely because you have filed for bankruptcy. At a time when you’re already under financial pressure, having steady employment is vital to helping you repay debts and recover financial health.

Legal Aid

Filing for bankruptcy with the court entitles you to a court-appointed representative. This individual–the trustee–will handle the financial elements of your case from beginning to debt discharge or the establishment of a repayment plan, including the processing of your payments. Since they will operate on your behalf, you will not have to deal with creditors. It’s also possible that you may not need to repay certain debts, depending on the type of bankruptcy you file. Having the trustee working on your case means that the potentially overwhelming pressure you felt previously will be lessened, and you can focus on improving your financial situation. Better still, by filing for bankruptcy you can generally head off future legal troubles and actions on the part of creditors. Decisions made in bankruptcy cases are final, so if creditors approve a deal, they can’t attempt to reverse it later on.

If you’re facing other legal challenges, like a potential eviction notice from your landlord or a lawsuit over medical debt, credit card debt, a car accident or breach of contract, a bankruptcy filing could put at least a temporary end to some lawsuits. Seek advice from a seasoned bankruptcy attorney to ensure that this is true in your case.

Asset Protection

While some assets may be liquidated to pay creditors, there are plenty of exemptions available. That said, if you’re planning to move across state lines soon and the state you’ll be living in doesn’t have favorable exemption laws, it could be beneficial to look into bankruptcy beforehand. This is especially true if you’re moving to take a higher paying job, because to qualify for chapter 7 bankruptcy you’ll need to pass the means test. Filing before you begin earning higher wages will entitle you to certain exemptions and could qualify you for a chapter 7 case. And if you know that you’ll be receiving property or another inheritance soon, filing sooner rather than later could better protect your assets, once you have them. Again, a seasoned bankruptcy lawyer can ensure that you’re making the smartest decisions.

A Fresh Financial Start

Most importantly, and a key reason why so many people opt for bankruptcy, is that a bankruptcy filing gives you a clean slate, either eliminating debt or helping you to develop a solid plan for repayment. Taxes in arrears and resulting wage garnishment can often be addressed as part of your case, ensuring that you repay, but that it’s done by the court-appointed schedule. And depending on the situation and the age of the debt, it could potentially be discharged. 

In general, debts are often settled for less than the amount owed, as creditors have to accept the repayment plan as determined by your case trustee, if repayment is even an option. This fact alone is a huge help to anyone struggling under the heavy burden of debt. And once those unsecured debts are gone, they are in the past. The focus then shifts to implementing advice and getting back on your financial feet, including the reestablishment of your credit. Because debt elimination naturally lowers your debt-to-income ratio, this process can begin right away. Hausen Law’s 720 credit repair partnership program is a great place to start. Additional requisite credit counseling courses can help you to learn about budgeting and investing as you work to build and retain strong credit. And above all else, the mental and emotional weight being lifted from off your shoulders can do wonders to help you move past this chapter in your financial life.

Partner with a Seasoned Ohio Bankruptcy Lawyer

Filing for bankruptcy is no longer considered to be the financial death sentence it once was. Today it’s more often seen as a safe and effective way to dig out from under a mountain of debt. But it can also have some real-world, positive outcomes for folks who are struggling. Millions of Americans and countless businesses take advantage of this legal provision every year. The shame and stigma of the past have significantly eased–now is the time to take advantage of the clear benefits that come from a bankruptcy filing.

Give us a call and an experienced Northeast Ohio bankruptcy attorney will be happy to help. Chapter 7 bankruptcy lawyer James Hausen is proud to serve all of Northeast Ohio, including the Akron, Canton, Cleveland, Wooster, Dover/New Philadelphia, and Youngstown communities. Reach out today for expert legal advice and help to recover your financial health.