What kinds of timing problems are can be solved in bankruptcy?
Bankruptcy proceedings serve as a circling of the wagons around your personal situation, preventing your creditors from all ganging up you at the same time. This gives a very powerful timing tool to the bankruptcy.
Things bankruptcy can stop.
DEBT COLLECTION HARRASSMENT: Perhaps the most abusive and irritating thing about falling behind on bills is the incessant phone calls and collection attempt you will receive form debt collectors. Practically immediately upon filing, all phone calls and collections attempts will stop. In fact, if the harassment doesn’t stop after the creditor learns of the bankruptcy, in many cases you can sue the creditor for failing to follow the bankruptcies order to leave you alone.
CREDITOR GARNISHMENTS ON YOUR PAYCHECK OR BANK ACCOUNTS: If a creditor is garnishing, or taking from you, some portion of your paycheck (in Oregon, this is typically 25% of you after tax wages until the debt is paid) or your bank account balance, the filing of a bankruptcy will stop the garnishment, typically by the next pay period. If filed within 90 days, you may be able to recover some portion or all the garnished funds that were taken within the last 90 days right before the filing of a bankruptcy depending on your exemption schedule.
FORECLOSURE ON YOUR HOME: If there is a sheriff’s sale on your home pending soon, a bankruptcy filing will stop the foreclosure, in some cases permanently if the situation can be made to work, and allow you time to pay your mortgage arrears or at least provide for extra time in the home before a foreclosure sale will go through.
LAWSUIT JUDGMENTS: If a lawsuit is filed against you and you file bankruptcy, the judgment cannot be entered against you during the bankruptcy. In most collection lawsuits, the lawsuit is permanently eliminated with the filing of bankruptcy.
DRIVER’S LICENSE SUSPENSIONS FOR TRAFFIC TICKETS: In Chapter 13 cases, if your driver’s license is suspended for traffic violations, your driver’s license can be reinstated in most situations without paying the fines.
UTILITY SHUT OFFS: Utilities must turn on services after a bankruptcy filing and resume service, although they often will require you to build up a security deposit, typically over a number of months on your after bankruptcy monthly statements.
FINANCIAL STRESS: Once you take the step to file bankruptcy, often times the weight of the world seems to come off your shoulders. Just knowing that you’ve taken control back over you finances through the filing acts as a pressure relief valve for many clients.
This is not an exhaustive list. But this sheds lights on the things that bankruptcy clients and bankruptcy attorneys know: That once you’ve made the decision regarding bankruptcy, often times there is a clear path to the light at the end of the tunnel.