Deciding whether to file for bankruptcy isn’t easy – nor should it be. If the benefits outweigh the burdens, perhaps it’s right for you.
It would be unfair of me – in fact, of any lawyer – to proclaim that bankruptcy is all about benefits. So, too, it’s wrong for pundits and creditor representatives to say there are no advantages whatsoever. Rather, it’s a question of balance. For the right person, the benefits can be huge. For others, they don’t matter much if at all.
That’s one of the reasons why I turn away about 60% of the people who call me up thinking that either Chapter 7 or Chapter 13 is a good idea for them. The reality is that for some, the benefits don’t apply. They’ve got no upside to filing a case and, for that reason, I either give them another option or simply send them on their way.
What are some of the biggest benefits of bankruptcy? Here are my top 9:
- when you file for bankruptcy you can permanently wipe out your obligation to repay most debts;
- filing for bankruptcy protects your property, income and bank accounts from creditors;
- if you’ve got a car, under Chapter 13 you may be able to lower the interest rate on your car payment or ever the balance due;
- under water on your home? You might be able to get rid of that second mortgage;
- the automatic stay stops repossessions, utility shut-offs, foreclosures and, in many cases, evictions;
- in Chapter 13, the automatic stay extends to other people who are obligated to make payments on your debts;
- filing for bankruptcy may help you keep from losing your driver’s license due to excessive fines;
- Chapter 13 can give you a way to pay past-due child support obligations, thereby removing the possibility of jail time and tax refund offset while still providing for your child; and
- if you’ve got tax debts, you may be able to wipe them out. Even if you can’t wipe them out, you can pay them off without further interest or penalty.
I’m not saying this is the right solution for everyone. In fact, this is and should be a last resort for all but a very few. It’s time-consuming, paperwork intensive, and is going to end up costing you money for a lawyer (you can do it yourself, but you can also do your own surgery). Those are some heavy responsibilities.
In the end, it’s up to you. You’ve got to weigh the benefits and burdens, decide if it’s right for you, and take appropriate action. Don’t listen to your friends or family members. Decide whether this is the best move for you on balance, and move ahead accordingly.
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