Bankruptcy can help with debt and financial difficulties in many ways. These can include the following benefits:
1. Eliminate unsecured personal credit card debt. Both chapter 7 and chapter 13 bankruptcy can help you eliminate unsecured credit card debt that you personally owe. If you pass the Means Test then chapter 7 may be the right chapter to file under, because most if not all unsecured debts are discharged and eliminated through bankruptcy under this chapter. Chapter 13 allows you to make reasonable payments if this is possible for a specified time, and then any credit card debt left is normally discharged.
2. Lower your debt payments and total monthly amount owed on your debts. When you file for chapter 13 bankruptcy protection then your bankruptcy lawyer will help create a repayment plan which needs to be approved by the bankruptcy court. All of your income, monthly expenses, and debt payments will be evaluated when this repayment schedule is designed. In many cases you will pay less in debt each month and will finally be able to meet your monthly expenses on time without any difficulty. Any excess income is used by the bankruptcy court to pay down your debts.
3. Keep your business open while managing the debt obligations of the business. Depending on the structure of your business a chapter 7, chapter 11, or chapter 13 bankruptcy may allow you to keep the business open while the bankruptcy case proceeds.
4. Resolve any unpaid medical debt that you owe. Whether you file under chapter 7 or chapter 13 of the bankruptcy code any unpaid medical debt that you owe can be listed and will finally be resolved. This includes doctor fees, hospital costs, testing expenses, ambulance bills, and any other types of medical debt that you may owe.
5. Settle any outstanding vehicle loans that you owe or are behind on. A chapter 7 bankruptcy case often means you can return the vehicle and any remaining debt is discharged so that you end up owing nothing on the loan after your bankruptcy case is finished. A chapter 13 bankruptcy case may allow you to continue making the payments as they become due and place any past due amount in the court approved repayment schedule. In this scenarion you would be able to keep the vehicle as long as the current payments are made as they become due.
6. Stop foreclosure, keep your home, and lower the payments. A chapter 13 bankruptcy may be able to help you avoid foreclosure and keep your home instead of losing it back to the mortgage lender. In addition this type of bankruptcy case may be able to lower the monthly payments that you are required to make and include any past due amounts into the repayment plan that the court agrees to. If you decide to allow the mortgage lender to tak the property back then you could eliminate any unpaid mortgage debt that is still owned on the home.
7. Keep property and get a fresh financial start. Bankruptcy allows you to deal with debt on your terms, and will take some of the pressure off of you. The exemptions that the bankruptcy code provides can help you protect your property from creditors and ensure that you get a fresh financial start without having to start fresh as far as assets and property are concerned. The legislators knew that allowing debtors to take all of your personal property during bankruptcy would be a mistake, because you would quickly end up in debt again to replace essentials that are needed.