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3 immediate benefits of filing for bankruptcy

On Behalf of | Nov 9, 2022 | Bankruptcy, blog |

When you have numerous debts that you can not pay, you might face the possibility of losing your home or property. You might have creditors contacting you relentlessly trying to collect money that you do not have.

Bankruptcy can provide relief from overwhelming debt starting as soon as you file. When you file for bankruptcy, the court generally issues an automatic stay, which has immediate effects.

Prevent foreclosure

If you are behind on mortgage payments but have a source of income, filing a Chapter 13 bankruptcy petition can prevent foreclosure of your home. Under Chapter 13, you can work out a payment plan to keep your house.

Unfortunately, filing for bankruptcy may not prevent foreclosure if the lender initiated foreclosure proceedings before you filed.

Avoid eviction

When you struggle to pay your rent, homelessness is a very real and terrifying possibility. In some cases, the automatic stay bars your landlord from evicting you after you file for bankruptcy.

As with foreclosure, you may not be able to avoid eviction if your landlord started the process before you filed for bankruptcy. Your landlord may also be able to evict you if he or she believes that you have been using illegal drugs on the property.

Stop collection efforts

Generally, creditors can not contact you or garnish your wages while you have a pending bankruptcy case. The automatic stay puts a stop to most of these actions as soon as you file. However, this does not apply to non-dischargeable debts. Examples of such debts include child support, alimony, criminal fines and certain taxes.

Filing for bankruptcy can be a positive step toward a brighter financial future. As soon as you file the petition, you can experience relief from collection efforts and threats of eviction or foreclosure.