Three Questions And Answers To Help Enhance Your Understanding Of Bankruptcy

Few people imagine that they will experience significant financial problems, but when these issues arise, it is important to understand the various options available for addressing them. More precisely, bankruptcy protection can be vital for allowing you to clear these debts so that you can start fresh.

Does Filing For Bankruptcy Mean You Are Irresponsible?

There is a powerful stigma associated with bankruptcy protection, and it can be difficult for people to bring themselves to seek this protection for fear of being labeled financially irresponsible or uninformed. While poor decisions can lead a person to need bankruptcy protection, it is also a reality that issues far beyond your control can play a part in needing this protection. For example, a person that suffers a job loss or accumulates large amounts of medical debt may find it impossible to overcome the financial ramifications of these events.

How Long Will It Take For Creditors To Cease Collections Against You?

It can be common for individuals to delay filing for bankruptcy until they have no other choice. When this is the case, creditors can be pursuing aggressive means to get their payments, such as lawsuits or wage garnishments. Not surprisingly, you will likely want these actions to cease as soon as possible. Fortunately, creditors are legally obligated to stop collections once a person has filed the initial paperwork for bankruptcy protection. This will allow you to live in peace while the bankruptcy works through the court system. If a creditor continues to attempt to collect from you, it is imperative to notify your attorney. There are stiff fines that can be levied for creditors that violate the court order to cease, and you may be entitled to compensation.

Will All Of Your Debt Be Discharged At The End Of These Proceedings?

One of the more prevalent ideas that people have about pursuing bankruptcy is that it will forgive any and all debt that they have accumulated. While bankruptcy can discharge most debts, there are some that can not be discharged. For example, student loans and tax debts are exempted from bankruptcy protection. Also, any debts that were secured with collateral may not be discharged, as the collateral will be used to settle the creditor's claim. During your consultation with your bankruptcy attorney, you will need to provide a comprehensive list of the debts that you owe, and they will be able to go through this list with you so that you understand exactly which debts can be discharged and those that will need to be settled or renegotiated.