When you have been unfortunate enough to experience serious financial difficulties, it is important for you to understand bankruptcy protection. This can be an excellent option for those that are needing to get a fresh financial start. However, if you have limited experience with bankruptcies, you may benefit from having the following couple of questions answered.
Will A Bankruptcy Help You If Your Creditors Are Threatening Legal Action?
It is an unfortunate reality that your creditors can utilize rather aggressive actions to collect their debts. This can include filing a lawsuit against you, confiscating property and garnishing your wages. Unfortunately, there are some people that may assume that there is nothing that can be done to stop these actions.
Luckily, filing for bankruptcy protection will force your creditors to cease any legal actions that they were taking against you. However, you should know that this protection will only last as long as you are going through the bankruptcy process. In other words, if you decide to stop the bankruptcy proceedings, your creditors will be able to resume these actions against you.
Does It Matter What Type Of Bankruptcy You File?
There are a couple of types of bankruptcy that individuals will commonly utilize, and it is important for you to understand the differences. For those that are able to pay back the majority of their debts, it may be possible to file for Chapter 13 protection. Under this type of bankruptcy, your debts will be reorganized with the supervision of the courts to make them easier for you to repair. In order to qualify for this type of protection, the courts will need to evaluate your assets and income to ensure that you will be able to make reasonable payments towards your debts.
If you are unable to qualify for a Chapter 13 bankruptcy, you will likely need to pursue a Chapter 7 filing. Under this type of bankruptcy, it is possible for some of your assets to be liquidated in order to pay off your creditors. While many of your possessions may be at risk with this type of bankruptcy, it is possible to retain some of your possessions that are essential. For example, if you are a professional driver, your vehicle may be exempted as it is essential for your ability to earn a living. Unfortunately, the rules surrounding these exemptions can be rather complicated, and you should retain an experienced bankruptcy attorney to help ensure that you understand how to get the most from the applicable exemption laws.