The Advantages of Bankruptcy
The advantages of bankruptcy give a debtor relief from insurmountable debt that is difficult or impossible to pay. Unlike days of old, there are no debtors prisons in the United States or most of the civilized world. People who do not pay their bills, however, are subject to being named in a lawsuit by their creditor. One of the advantages of bankruptcy is that once the petition has been filed, creditors are no longer able to contact you for money.
Filing a bankruptcy petition in federal bankruptcy court gives you automatic protection against creditors. If a creditor calls your home after you have filed the petition, you must tell them that you filed bankruptcy. In many cases, the creditor will want to know the case number, which you should provide. Like most cases filed in both federal and state court, bankruptcy case records are open to the public. There is no point in trying to hide your case number from your creditor as they will have to be notified of the proceedings anyway.
After you tell the creditor that you have filed bankruptcy, that creditor should no longer contact you. If they do, make a note of the time, date, name of the person who called and what was said. The creditor is in violation of Federal law. One of the biggest advantages of filing bankruptcy is to protect debtors from harassing calls from creditors and collection agencies.
If you file Chapter 7 bankruptcy, under new provisions you must demonstrate that you are unable to pay even a portion of the debt to the bankruptcy court. Once this is proven, your credit debt is completely eliminated and your slate wiped clean. Another one of the advantages of filing bankruptcy include the opportunity to start over.
If you have a business that is insolvent, meaning that it has less assets than debts, advantages to filing a business bankruptcy could include not losing your home or personal belongings if your business is incorporated as a separate entity and you have not personally signed for any loans. For this reason, those starting a business should always incorporate the business, put assets in the name of the corporation and also only sign loans as a corporate officer. Although your business may be bankrupt, your home and personal assets will remain safe from creditors.
The decision to file bankruptcy is never an easy one, but the advantages of bankruptcy can protect you from lawsuits from creditors, free you from debt and enable you to make a fresh start in life.