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Bankruptcy Basics

Posted on in Bankruptcy

Although it can seem that filing for bankruptcy will solve your financial and legal problems, that is not always the case for everyone. Whatever you may think is the right way to go, it is always important to weigh your options and take your time making such a big decision.

Reasons that you should file include the following:

  • most of your debts will be cleared,
  • you'll have a fresh financial start
  • you can keep certain exempt properties
  • If your license was suspended due to a debt, it can be reinstated without having to pay the debt in order to do so
  • employers and other public agencies cannot retaliate against you
  • you can restore utilities that have been shut off
  • foreclosures and repossessions are stopped immediately and cannot continue without approval from the court
  • bankruptcy stops collection agency harassment.

Although there are many great reasons to file, there are just as many reasons not to file. You should compare the above reasons to file with the following reasons not to file for bankruptcy before deciding.

After filing for bankruptcy,

  • the bankruptcy will stay on your credit rating for 10 years,
  • you may be forced to return any property that you have purchased but have not completed the payment(s) for
  • getting credit will be more difficult and more expensive
  • it is possible to protect your property and income without filing bankruptcy, so it may not be beneficial to file.
  • bankruptcy often causes strains in the relationships with cosigners and creditors
  • you are only able to file for Chapter 7 bankruptcy once within an eight year period.

If you do choose to file, there are some protections that you will have to help you when your debts have been cleared.

  • Automatic Stay forces collection activity by creditors and collection agencies to stop, as well as stopping foreclosures and repossessions except with court approval.
  • Fresh Start allows for utilities to be turned back on with the assurance by the bankrupt person to make future payments with a beginning deposit.
  • Employers are also not allowed to fire someone for filing for bankruptcy and receiving garnishment for one debt, which is considered discrimination. It is legal, however, to be fired if you get garnishments for more than one debt.
  • Government agencies, as well, are prohibited from discrimination in denying a bankrupt person a license or in any other way. The government can deny a bankrupt person credit, though, if that person's credit is bad other than due to the bankruptcy.

If you are considering filing for bankruptcy, contact a bankruptcy lawyer for assistance in your case. Newland & Newland attorneys can help you in Arlington Heights, Libertyville, Crystal Lake, Chicago, Waukegan and Itasca, Ill. courts today.

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