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Bankruptcy Broken Down:

How Can Filing For Bankruptcy Benefit Me?

Bankruptcy is often viewed as a scary, reputation shattering decision, but in reality declaring bankruptcy is a resolution to many American’s problems. Declaring bankruptcy allows for a fresh start and a clean slate. This could save you from losing your car, home and other possessions you have worked hard to keep. People often find themselves in circumstances out of their control that lead them to an overwhelming amount of debt they cannot repay, but now it’s time to take control of your situation and see if filing for bankruptcy could actually be the answer to your problems.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

Many Americans see filing for bankruptcy as a bad solution to the problem, when it actually means that you are responsibly handling your debts. The bankruptcy laws were created so that hard-working Americans could have a second chance. This allows certain debts to be dissolved without ever having to pay.

The definition of bankruptcy, in simple terms, is when a person cannot repay their outstanding debts with the resources they currently possess. 767,721 people filed for bankruptcy in 2017; it is more common than one would think.

Six Reasons It Might Be Time To File For Bankruptcy

If you find yourself in any of the following situations, you may want to seriously consider filing for bankruptcy; however, just because you are in any of these situations does not always mean bankruptcy is your only option. It is best to speak with a bankruptcy lawyer to ensure that filing for bankruptcy is the best solution.

  1. You have lost your job and have no unemployment benefits and little or no savings.
  2. You have incurred a significant amount of medical debt.
  3. Your home is being foreclosed or your landlord is seeking to evict you. By filing for bankruptcy, this will temporarily pause the foreclosure/eviction. In order to keep your home in a Chapter 7 bankruptcy, you must quickly catch up on your payments or make a repayment agreement with the lender. If this isn’t possible, then a Chapter 13 bankruptcy may allow you to create restructured mortgage payments.
  4. Your vehicle is about to be repossessed. This will temporarily stop the repossession. Under Chapter 7, you will need to catch up and keep up with payments in order to keep your vehicle. Chapter 13 may allow you to restructure the payments.
  5. In some cases, a court will issue an order requiring your employer to withhold a certain amount of your wages and have them sent directly to the person or institution to whom you owe money. This is known as wage garnishment. By filing for bankruptcy, the wage garnishment will stop.
  6. You are moving to a state with less favorable exemptions. You must file for bankruptcy in the state where you have permanent residence. For example, this is typically where your vehicle is registered, where you have your driver’s license, where you file your tax return and where you are registered to vote.

How Filing For Bankruptcy Is Beneficial

A very immediate benefit of filing for bankruptcy is called automatic stay which means that your creditors are notified of your bankruptcy filing and must stop trying to collect the debt. They cannot call, mail, pursue a lawsuit, garnish your wages, try to seize your bank accounts or shut off your utilities. Creditors that are attempting to get the money you owe after you file for bankruptcy are in violation of federal law and may be penalized if they continue trying to contact you in any way.

Bankruptcy typically allows you to keep your home, maintaining stability for your family. It also usually protects your car. Once you file for bankruptcy, you can immediately begin rebuilding your credit as well.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

Chapter 7 bankruptcy is known as liquidation bankruptcy. Most of your property is sold and used to pay off your debts. Chapter 7 bankruptcy is usually for people with limited incomes and do not have the ability to pay back all or some part of their debts.

Chapter 7 will remain on your credit reports for up to 10 years. For a Chapter 7 bankruptcy, the filing fee with the bankruptcy court costs $335.

Chapter 13 bankruptcy is known as a reorganization bankruptcy. This keeps your property from being sold when you file for Chapter 13 protection. If you successfully complete a court-mandated repayment plan, you may be able to keep your property. You cannot have more than $394,725 of unsecured debts or $1,184,200 of secured debts.

Chapter 13 will remain on your credit reports for up to 7 years. For a Chapter 13 bankruptcy, the filing fee with the bankruptcy court is $310.

What Debts Can Be Wiped Out?

In a Chapter 7 bankruptcy, debts that can be wiped out are credit card debt, medical bills, personal loans, lawsuit judgments and obligations from leases or contracts.

In a Chapter 13 bankruptcy, all the debts listed above can be wiped out along with debts from a divorce (except support payments) and debts for loans from a retirement plan.

Debts that can’t be wiped out are alimony, child support, student loans, debts to government agencies, income taxes, debts for personal injury caused by driving while under the influence and any court fines or penalties.

Who Can Help?

If you’re looking for a bankruptcy attorney, contact David S. Clark at (334) 749-3800 or go to and fill out a free consultation form.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.