Those having financial difficulties that are considering filing for bankruptcy need to factor in all of their options and weigh the advantages against the disadvantages found in the bankruptcy law. The most obvious advantage to filing bankruptcy is the debtor gets a fresh start. The bankruptcy will wipe out all of their unsecured debts and give the individual a chance to start over. Like all things, with the good there is some bad. For most people, the hardest part of filing bankruptcy is the psychological effects it has on the debtor, as they feel it is a mark of shame. Most debtors also have a tough time having all of their credit cards shut off with the filing. They feel they have lost all their financial freedom, not considering the crushing debt that is sucking the life out of them. After overcoming the emotional effects, most individuals feel relieved after they file knowing that they soon will be debt-free.
After the bankruptcy is filed with the court, the automatic stay will be put in place and creditors will have to stop calling you, garnishing your wages, and taking any actions against you to collect a debt. If the creditors did it not knowing about the bankruptcy filing, you can tell your attorney and they should stop. On the other hand, if the creditors continue on harassing you after they've been noticed by the court of the bankruptcy filing, the court can award you actual and punitive damages. To get the most out of the automatic stay it's important make sure you have the correct address to send the creditors notices to. This way if the creditors are properly noticed, most of them will leave you alone because of the possible repercussions from the bankruptcy court.
At the end of the bankruptcy, the court will issue a discharge that releases you from all liability of the debts specified. In other words, all those debts are wiped out and you are no longer responsible to pay them because of the discharge. The bankruptcy court discharge is a permanent order that directs the creditors to refrain from taking any further action to collect on those debts that you previously owed. Although a debtor is released from liability of the debts that were discharged, a valid lien will remain even after the bankruptcy case. Because of this, a secured creditor can recover property that wasn't paid for by enforcing the lien and repossessing it. Even after filing bankruptcy, the basic rule is still in play, if you don't pay for it you can't keep it. If you want to keep a secured piece of property like an automobile, you will need to work something out with the lender or keep current on your payments.
Most people are confused when it comes to discharging taxes and a bankruptcy filing. Some taxes can be discharged but they have to meet certain criteria. First of all, the due date for filing a tax return must be at least three years old, and the tax return had to be filed at least two years ago. Next, to discharge a tax debt in bankruptcy, the tax assessment has to be a minimum of 240 days old. Lastly, the debtor's tax returns must be current and on file before the discharge would be granted. Filing bankruptcy and discharging old tax debt can be complicated and should be discussed with a bankruptcy attorney. Before making your decision to file for bankruptcy, it's important to get a consultation with a bankruptcy attorney. Most people burdened with financial troubles feel that the positives outweigh the negatives when it comes to filing for bankruptcy.
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