Learn About The Purposes, Benefits And Costs Of Bankruptcy
Financial debt can hamper your options and create hardship for your family. It may result in you facing creditor harassment and possibly even foreclosure of your home. However, a bankruptcy option may provide you with a fresh financial start.
The Delaware lawyers at Poole, Mensinger, Cutrona & Ellsworth-Aults, can help you determine whether bankruptcy is the right option for you. We will look closely at your financial situation, and will explain to you the benefits of a personal bankruptcy filing. We will also discuss the necessary steps to take in order to better your financial circumstances.
Your Rights Under The Federal Bankruptcy Code
The United States constitution provides a method whereby individuals burdened by excessive debt, can obtain a “fresh start” by filing a bankruptcy and pursue productive lives unimpaired by past financial problems. It is an important alternative for persons strapped with more debt and stress than they can handle.
The federal bankruptcy laws were enacted to provide good, honest, hardworking debtors with a fresh start and to establish a ranking and equity among all the creditors clamoring for the debtor’s limited resources.
Bankruptcy helps people avoid the kind of permanent discouragement that can prevent them from ever re-establishing themselves as hardworking members of society.
To the extent that there may be money or property available for distribution to creditors, creditors are ranked to make sure that money or property is fairly distributed according to established rules.
This discussion is intended only as a brief overview of the types of bankruptcy filings and of what a bankruptcy filing can and cannot do. No one should base their decision as to whether or not to file bankruptcy solely on this information. Bankruptcy law is complex, and there are many considerations that must be taken into account in making the determination whether or not to file. Anyone considering bankruptcy is encouraged to seek the advice and assistance of our experienced attorney who has been practicing bankruptcy law for 20 years.
The Types Of Bankruptcy
The Bankruptcy Code is divided into chapters. The chapters which almost always apply to consumer debtors are Chapter 7, known as a ” straight bankruptcy“, and Chapter 13, which involves an affordable plan of repayment.
An important feature applicable to all types of bankruptcy filings is the “automatic stay”. The automatic stay means that the mere request for bankruptcy protection automatically stops and brings to a grinding halt most lawsuits, repossessions, foreclosures, evictions, garnishments, utility shut-offs, and debt collection harassment. It offers debtors a breathing spell by giving the debtor and trustee assigned to the case time to review the situation and develop an appropriate plan. In most circumstances, creditors cannot take any further action against the debtor or their property without permission from the Bankruptcy Court.
What Bankruptcy Can And Cannot Do For You
Bankruptcy may make it possible for financially distressed individuals to:
- Discharge liabilities for most or all of their debts and get a fresh start. When the debt is discharged, the debtor has no further legal obligation to pay the debt.
- Stop foreclosure actions on their home and allow them an opportunity to catch up on the missed payments.
- Prevent repossession of a car or other property, or force creditors to return property even after it has been repossessed.
- Stop the wage garnishment and other debt collection harassment, and give the individual some breathing room.
- Restore or prevent termination of certain types of utility services.
- Allow debtors an opportunity to challenge the claim of certain creditors who have committed fraud or who are otherwise seeking to collect more that they are legally entitled to.
Bankruptcy however, cannot cure every financial problem. It is usually not possible to:
Eliminate certain rights of secured creditors. Although a debtor can force secured creditors to take payments over time in the Bankruptcy process, a debtor cannot keep the collateral unless the debtor continues to pay the debt.
Discharge types of debts singled out by the Federal Bankruptcy Statutes for special treatment, such as child support, alimony, student loans, certain court ordered payments, criminal fines and some taxes.
Protect all co-signers on their debts. If a relative or friend co-sign a loan which the debtor discharges in the Bankruptcy Petition, the co-signer may still be obligated to repay whatever part of the loan not paid during the pendency of the bankruptcy case.
Discharge debts that are incurred after the Bankruptcy Petition is filed.
Bankruptcy’s Effect On Your Credit
By federal law, a bankruptcy can remain part of the debtor’s credit history for 10 years. Whether or not the debtor will be granted credit in the future is unpredictable, and probably depends, to a certain extent, on what good things the debtor does in the nature of keeping a job, saving money, making timely payments on secured debts, etc.
Collection Attempts After Filing For Bankruptcy
The creditor MUST stop calling or harassing you IMMEDIATELY after you file your Bankruptcy Petition with the court. ALL wage attachments must IMMEDIATELY stop. However, they may not receive notice for approximately three weeks. You will receive a letter from our office immediately after you file the Bankruptcy Petition which will state your case number, Chapter number, whether you file a Chapter 7 or a Chapter 13, and the date of filing. If the creditors should call during this period, please just give them this information.
Bankruptcy problems require personalized attention and skilled representation. Contact a bankruptcy attorney at the Wilmington office of Poole, Mensinger, Cutrona & Ellsworth-Aults, for a free consultation. Call Poole, Mensinger, Cutrona & Ellsworth-Aults, at 302-358-2679, or write to us using this convenience online form.
Poole, Mensinger, Cutrona & Ellsworth-Aults, is a debt relief agency. We help people discharge their debts through the bankruptcy code. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. This is advertising material.