4. Get Outside Help to Design a Repayment Plan (2)
Filing for bankruptcy puts into effect the “automatic stay.” The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally take (garnish) your wages, empty your bank account, go after your car, house or other property or cut off your utility service.
Until your bankruptcy case ends, your past financial problems are in the hands of the bankruptcy court. Nothing can be sold or paid without the court’s consent. You keep control, however, of virtually all property and income you acquire after you file for bankruptcy.
At the end of the bankruptcy process, most of your debts are discharged—wiped out—by the court. You no longer legally owe the debts you owed when you filed for bankruptcy. If you incur debts after filing, however, you are still obligated to pay them. And you can’t file for Chapter 7 bankruptcy again for another six years from the date of your filing.
Of course, bankruptcy isn’t for everyone. One reason is that many types of debts can’t be erased in Chapter 7 bankruptcy, including:
- child support or alimony obligations
- student loans, unless repaying would cause you undue hardship
- court-ordered restitution—payments you’re ordered to make after a criminal conviction
- most federal, state and local income taxes less than three years past due, and any money borrowed or charged to pay those tax debts
- debts arising from intoxicated driving
- debts from a marital settlement agreement or divorce decree unless the bankruptcy judge rules it would be impossible for you to pay or that the benefit you’d get by the discharge outweighs any harm to your ex-spouse, and
- debts that a bankruptcy judge rules were incurred as a result of a wrongful act on your part—examples include debts incurred from fraud (such as lying on a credit application or writing a bad check), based on intentional injury (such as assault, battery, false imprisonment, libel and slander), larceny (theft), breach of trust or embezzlement.
Taken From : Credit Repair by Attorneys Robin Leonard and Deanne Loonin
