How Bankruptcy Helps


How Bankruptcy Helps

Credit card debt destroys the financial freedom of many families and individuals. The compounding interest accruing on revolving debt makes it nearly impossible to pay off. Add to that struggle an illness, injury or employment loss and families can become behind in their payments through no fault of their own. As interest piles up, it's easy to become overwhelmed. As a result, the credit card companies hound the consumer through collection agencies or sue to recoup the money owed. Declaring bankruptcy can halt all of these legal actions and the turmoil of unpaid debt.

About a decade ago, bankruptcy laws shifted, but it's still worth checking into whether one qualifies for bankruptcy to discharge debts. Of course, every case is different, but for many people, a chapter 7 bankruptcy can free the consumer from paying creditors such as credit card companies and retail cards; end lawsuits over credit card debt; cease paycheck garnishments; and issue a cease and desist to the debt collectors calling and sending letters to those unable to pay their debt.

Bankruptcy law provides everyday people with a clean financial slate. They can learn how to better manage debt, get back on their feet and re-establish their credit history. Bankruptcy provides a means to start over again.

Many people believe that bankruptcy is a financial disaster. Filing for bankruptcy doesn't mean that people can't apply for loans or obtain mortgages for seven years. Although the filing does appear on credit reports for 10 years and it often results in lower credit ratings, many people still qualify for home or car loans. They may receive higher interest rates, but most people can dramatically improve their credit rating within two to three years.

Credit repair companies promise to remove bad credit information from a person's credit report. This is something people can do for themselves, if they have proof that specific pieces of information are inaccurate. Some credit repair firms simply take care of the paperwork while others are just scams. Other companies stand ready to help individuals in bankruptcy or take advantage of them.

Many people improve their credit rating by taking the following steps:

1. Pay off any new charges or payments on time.

2. Obtain a secured credit card and pay off balances.

3. Take out a small personal loan and pay it off promptly. Although the interest rate won't be favorable, if the loan term is short and there's no pre-payment penalty, the consumer won't have to pay much interest.

Chapter 7 Bankruptcy Stops Wage Garnishment

No one likes to see his hard-earned paychecks garnished. It's devastating to receive less income at a time when money is already tight, but that's what happens if a creditor obtains a judgment against a consumer. Instead of receiving the normal take-home pay, a portion of each check is siphoned out and sent to his creditor(s). But consumers don't have to struggle. Chapter 7 bankruptcy stops wage garnishment--for good. Instead of losing money to a creditor every payday and sinking further into debt, chapter 7 bankruptcy ends wage garnishment.

Re-establish Bank Accounts

Creditors have the power to freeze consumers' bank accounts if they have a judgment against a debtor. Sadly, many people don't realize this has happened until their bank notifies them--or the money in their account is inaccessible. Some may even write checks that "bounce" before they realize that their money is frozen.

A chapter 7 bankruptcy filing can free a bank account from a creditor's stranglehold. It usually takes about a week to obtain the court order to restore the account.

The Exempt Income Protection Act, a new law applicable in the state of New York, states that banks cannot freeze amounts under $2,100. If a creditor freezes a bank account, any consumer can ask the bank for the release of any amount under $2,100.

End Creditor Calls and Letters

No one likes to receive threatening calls and mail from creditors. Already stressed from too much debt, and possibly an illness, injury, or lack of employment, creditor harassment is the last thing a family needs. Such harassment makes every unexpected letter, every ringing phone a worrisome reminder of the uncollected debt.

Filing for bankruptcy can make it all go away. Anyone who cannot meet the minimum credit card payment each month, house payment or car payment(s), may qualify for filing for bankruptcy. That ends all of the calls and letters to allow families a chance to recover. They can finally catch their breath and work to rebuild financially.

Creditors may not directly contact consumers who have filed for bankruptcy. Their requests must go through the attorney instead. Should the creditor or debt collector try to contact the consumer directly, he can file for damages in a suit against them. Since the debt collectors and creditors realize this, consumers can rest assured that the difficult phone calls and derogatory letters will end once the bankruptcy goes through.

If you face financial hardship and cannot meet your financial obligations, we provide answers to your dilemma. You need not battle with debt you cannot pay. We can help you find a way out of the nightmare of excessive credit card debt. Our caring staff and highly experienced attorneys take the time to truly listen. We understand the struggle and embarrassment many people feel when their finances become tangled by debt. We can help you understand your legal options for obtaining financial freedom. Let us assist you in gaining control of your money. Your initial consultation is free. Call or email us today.

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