There are many advantages to declaring sandiego-bankruptcyattorney.com in California. Bankruptcy may allow you to eliminate most or even all of your debts, depending on your unique financial situation. Declaring bankruptcy may help you prevent the repossession of vital property in your life, such as your car or other motor vehicle. It may also help you stop foreclosure on your home, and stop debt collection services from harassing you and/or garnishing your wages. Also, as mentioned in the paragraph above, declaring bankruptcy will relieve you from any immediate debts, as the court system will issue you an automatic stay San Diego Bankruptcy Attorney. Lastly, bankruptcy laws make it illegal for employers to discriminate against you for declaring bankruptcy, so doing so shouldn’t have a negative effect on your employment future. However, nothing in life is without consequences, and there are certain drawbacks associated with declaring bankruptcy that one should be aware of before entering the process. Declaring bankruptcy will not eliminate all of your debts, such as your recent back taxes or fines currently owed to any government agencies. Also, filing for bankruptcy will have a negative effect on your future credit score. This may make it more difficult to secure a loan for a car or for a home in upcoming years. Additionally, your bankruptcy filing will have to made public record by law, meaning anyone can request a copy of your filings and examine the details of your bankruptcy. Lastly, shady credit lenders have been known to target people who have recently declared bankruptcy, so you may be targeted if you do end up filing for bankruptcy.
An automatic stay against creditors: diego bankruptcy attorney Once you file, the court automatically issues this stay against any and all debt collection activity. It does not actually cancel your debt, but it suspends any debt collection proceedings until your bankruptcy case is complete or the stay is lifted. This means no more:
Calls or letters from debt collectors, Lawsuits on the debts, Wage garnishments, Home mortgage foreclosures, Property repossession. If a creditor tries to collect a debt from you after the court grants your automatic stay, your attorney can bring a contempt of court action against them. This means the court can make them stop their collection attempts, fine them and/or make them pay you damages.
NOTE: An automatic stay does NOT have the power to stop the following:
Criminal proceedings, Government tax audits, The establishing, modifying or collecting of child support or alimony
Establishment of paternity, Co-debtors or co-signers. If you have already filed for bankruptcy once within the past year, you can petition the court for an extension of the first automatic stay. However, if you have filed two or more times during the past year, your automatic stay won’t go into effect without an explicit order from the court.
Dischargeable debts: You may be able to discharge, or cancel, your responsibility to repay these debts. A dischargeable debt is one that can be eliminated by bankruptcy. These typically include credit card debt, medical and utility bills, and personal loans.
Bankruptcy exemptions might allow you to maintain ownership of your property after bankruptcy:
If you can “exempt” an asset, this means you don’t have to worry about it being seized in the bankruptcy. These exemptions play an important role in both Chapter 7 and 13 bankruptcies. Some exemptions protect up to a certain dollar amount of an asset; sometimes the exemption covers the entire value of an asset. Some exemptions apply to certain types of assets, like a motor vehicle or wedding ring, while others can be applied towards any property you own.
Credit Score: Although worries about a tanked credit ranking delay many in filing for bankruptcy, and a bankruptcy filing remains on your record for 7-10 years, many debtors actually start improving their credit scores after they file for bankruptcy. Once a person’s dischargeable debts are cancelled, this allows them to move forward with a clean slate and begin rebuilding their credit.
However, filing for bankruptcy at the wrong time or filing when you shouldn’t can make a bad financial situation worse. Filing too early can sometimes mean that a person loses property he or she would otherwise have been able to keep, or that they have to file a different type of bankruptcy that is not in their best interests (i.e., having to file a Chapter 13 instead of Chapter 7). Regardless, even when bankruptcy is a person’s best option, filing also has real, lasting effects on a person’s finances that should be considered before filing.
The potential disadvantages of bankruptcy include:
Loss of credit cards: Many credit card companies automatically cancel any cards you hold when you file. You will probably receive numerous offers to apply for “unsecured” credit cards after filing. These can help you rebuild your credit, but usually require annual fees and high interest rates.
Immediate impact on your credit score: Chapter 7 bankruptcy stays on a person’s credit report of 10 years in North Carolina, while a Chapter 13 remains for seven (7) years.
Difficultly obtaining a mortgage or loan: A bankruptcy filing can make it difficult to get another loan or mortgage for many years.
Loss of property and real estate: Sometimes not all personal property and real estate will fit under an exemption. This means the bankruptcy court could seize some of your property and sell it to pay your creditors.
Denial of tax refunds: State, local and federal tax refunds can be denied because of bankruptcy.
Job and housing stigma: Some potential employers and landlords ask questions about any recently-filed bankruptcies and this can negatively affect your chances for both.
Non-Dischargeable debts: There are certain kinds of debt that cannot be discharged by bankruptcy. Non-dischargeable debts typically include alimony and child support, student loans, criminal restitution and fines, and any debts acquired through fraud. There is overlap between the advantages and disadvantages of filing for bankruptcy because so much of it depends on a person’s unique financial circumstances, and there are so many different factors that can affect these circumstances. Please contact our skilled bankruptcy attorneys at Arnold & Smith, PLLC today. We are dedicated to taking a case by case approach to help each client take control of his or her finances and future.