While many people tend to have a negative view concerning filing for bankruptcy, the truth is that it can bring welcome relief for those who are struggling to pay their creditors.
Once someone files for bankruptcy, an automatic stay goes into effect, which prevents creditors and bill collectors from harassing the filer.
Halting lawsuits and foreclosures
According to FindLaw, automatic stays offer many benefits to those who file for bankruptcy. An automatic stay prevents creditors from taking legal action, including any pending lawsuits. Additionally, this tool may prevent foreclosure, eviction and having utilities shut off.
Not only does an automatic stay cease creditor calls, but it will also prevent creditors from being able to garnish wages. This benefit is extremely helpful to those already experiencing financial hardships.
Preserving professional licenses
Failure to pay certain fees or dues may result in professionals losing their licenses. Section 362 of the United States Bankruptcy Code states that an automatic stay prevents the revocation of professional licenses, as well as driver’s licenses. This is extremely beneficial since most professionals cannot practice or make money without their licenses.
Regarding back child support
An automatic stay does not stop the obligation to pay child support. However, it does prevent reporting to consumer reporting agencies regarding back child support. Meaning that an automatic stay helps prevent someone’s credit score from declining because of overdue child support.
For people wanting to take advantage of debt discharge, certain items such as child support and student loans are exempt from discharge.
Filing for bankruptcy comes with several protections to help make life easier while people get back on their feet.