What Are the Benefits of Declaring Bankruptcy?
Bankruptcy gives you the opportunity for a new financial future. Depending on what type of bankruptcy you file, you can reduce or eliminate debt, or get more time to pay it off.
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Credit Counseling
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Before you can qualify to file for bankruptcy, you have to complete a court-approved credit counseling course. The course will help you decide how best to handle your financial situation and teach you how to avoid future financial problems.
Automatic Stay
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When you file for bankruptcy the law immediately imposes an "automatic stay" which means that your creditors must stop all debt-collection efforts. This means that all of the letters, phone calls, repossessions and foreclosures end.
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Debt Discharge
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One of the biggest benefits of bankruptcy is that it can discharge your debts. When a debt is discharged, it means you are no longer legally obligated to repay that debt. As a practical matter, the debt disappears.
Chapter 7
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Chapter 7 bankruptcy gives you a clean financial slate, with a few exceptions such as student loans and family support obligations. When you finish Chapter 7 bankruptcy, all of your other debts will be erased.
Chapter 13
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Chapter 13 bankruptcy does not eliminate all of your debts, but it does allow you to create a legal debt adjustment and repayment plan. The plan will likely reduce some of your debts and give you more time to pay off your other ones.
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