When it comes time to make the big decision about filing for bankruptcy, it's often due to a variety of financial problems. Getting behind on your bills can bring an onslaught of harassing collection activities and threats of property loss. Fortunately, a chapter 7 bankruptcy filing gives consumers a tidy method of dealing with multiple problems in one fell swoop. Read on to learn more about how the automatic stay can help you begin to see the light at the end of the tunnel.
Keep More of Your Paycheck: If you got behind so badly on some your debts that the creditor began garnishing your wages, you can get some immediate relief with a filing. While creditors can only take a certain percentage of your pay, every penny counts when you are going through hard times. It's important to caution that the original debt that led to the garnishment in the first place does not necessarily go away with a filling, but you will have more take-home pay to deal with your situation.
Keep Your Home: If your mortgage is so far behind that the lender is threatening foreclosure, you may be given a temporary reprieve (usually a few months) with a bankruptcy filing. The foreclosure proceedings are ordered to come to a stop, but in some circumstances you may still end up eventually losing your home. The likelihood of losing your home depends on several factors, such as:
- How far behind you are on your mortgage and how successful you are at working with your lender to bring your payments up to date.
- How much equity you have in your home. You home may be seized by the bankruptcy trustee to help pay off your debts if the equity is valuable enough. It should be noted that this could happen even if your payments are not behind. If you still owe a lot on your mortgage loan, the home is less a target.
- How much your total bankruptcy debt is. The trustee is unlikely to seize a home worth $250,000 to pay off a bankruptcy debt of $100,000.
- How much the homestead exceptions in your state are. These exemptions allow filers to chop off some the value of the home and thus potentially keep it after bankruptcy.
Keep Your Utilities On: A bankruptcy filing can delay any water, gas, land-line phone, and electricity disconnections, for at least 20 days.
Keep the Bill Collectors at Bay: All collections activities must come to a stop with your bankruptcy filing. If you are contacted by a collection agency or creditor after your filing, just let them know your federal filling case number and the contact information for your bankruptcy lawyer.
Talk with a lawyer like Thomas K Mast for more information.