Are you receiving creditor or debt collector calls after a bankruptcy? It doesn’t often happen, but it does happen. Nevertheless, when there is a discharge of debts after a bankruptcy, you are no longer responsible for paying the debt. So, the protection from collection calls and letters, granted when you first filed, becomes permanent.
Recently, a past client came to our offices asking, “How often can I file for bankruptcy?” Some may find this surprising. We may not see it on Wall Street, but the U.S. economy has struggled for a long time. So, it is not uncommon for a person to go through cycles of doing well, only to have their rug pulled from under them. While at one time multiple bankruptcies in a lifetime were unheard of, today it is not surprising. Nevertheless, the law does place some limits on filing multiple bankruptcies.
Do you want to completely wipe out your debt? When many people think of bankruptcy, they believe it as a way of completely erasing their debt. However, for the most part, bankruptcy provides two pathways. There is the liquidation of debt under Chapter 7, but there is also a court-supervised debt repayment plan with Chapter 13. At one time, a person could simply choose which path they wanted to take. Since 2005, bankruptcy law demands that many who can repay their debt file a Chapter 13, instead of a Chapter 7. This change spawned the creation of the means test.
Prior to filing bankruptcy, some people will try a debt reduction service or debt settlement service. The hope is that, with professional assistance, they can renegotiate their payment terms. The claim of these debt relief companies is that they have the ability to work with your creditors to lower payments, eliminate interest, and possibly even lessen the total amount owed. However, do debt reduction services really work?
Are your creditors suing you? If you are facing a civil lawsuit, you may want to consider filing for bankruptcy. In many instances, this will be your best option. A lawsuit can become stressful and costly. However, a bankruptcy will often ensure that a creditor never receives a judgment. This is because of one of the most powerful aspects of a bankruptcy, called the Automatic Stay. With very few exceptions, this injunction will stop the actions of creditors. So, a bankruptcy will stop a lawsuit.