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What can (and can’t) bankruptcy do? 3 misconceptions about bankruptcy

On Behalf of | Jun 29, 2020 | Bankruptcy

Bankruptcy is a process that lots of people think they know well. It seems straightforward. However, misconceptions about bankruptcy mean that you could miss out on the benefits it offers.

For instance, it seems counterintuitive, but did you know that declaring Chapter 7 or Chapter 11 bankruptcy can actually help you save your home or other important property? Or that it can remove second or third mortgages?

Three things you might not know about bankruptcy

  1. Bankruptcy provides an automatic stop to most debt collection methods.

Whether you file Chapter 7 or Chapter 11 bankruptcy, filing alone provides you with what is called an “automatic stay.” This means that creditors can’t use most debt collection practices to try and get money from you. It stops creditor harassment, and even covers foreclosure proceedings. It can buy you valuable time to figure out what to do,

  1. You can keep your property if you file for bankruptcy.

A lot of people have a mental image that bankruptcy means selling everything you own. That couldn’t be further from the truth. While some types of bankruptcy do include liquidating assets, if you have personal property that you’d like to keep, filing bankruptcy means agreeing on a manageable payment plan for your debts. That allows you to keep things like family heirlooms, cars and more.

  1. You can discharge normal bills with bankruptcy.

You probably know that bankruptcy can get rid of credit card debt and other consumer debt. However, it can also get rid of normal bills that have built up and may have gone into collections. Your power, gas or water bill all may be eligible.

The benefits of bankruptcy are many

Considering filing bankruptcy is scary. It feels like a financial failure. However, it is a uniquely American system designed to give you a fresh start. At our law firm, many of our clients say they feel immediate relief just by calling us for help. If you have questions about the process, call us today.