Bankruptcy can be a sensitive topic. There are very few people who actually want to file for bankruptcy but many people who could benefit significantly from doing so. If you are just starting to think about it and are wondering what the bankruptcy process includes, we invite you to contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free consultation. In the meantime, you can keep reading to learn five of the many reasons that bankruptcy works.
- It Stops All Collections Anyone who has gotten behind on debt knows what it is like to get never-ending calls from creditors. It can be humiliating, aggravating, and even frightening. When you file for bankruptcy, the creditors are required by law to stop all collection attempts and to only go through your attorney. This is true of all creditors – even the Internal Revenue Service.
- There Are Consequences if Collections Don’t Stop Many may roll their eyes and believe that while it might be the law that creditors stop calling you, many creditors will just choose to ignore that law. If they do, then they will be facing significant fines. Your bankruptcy attorney can file a report with a federal judge, who will then force them to stop contacting you and fine them.
- Future Payments to Creditors Are Limited When you file bankruptcy today, it limits any payment to creditors to your current value of assets – after you get credit for various exemptions such as your home or vehicle. This can be significantly less expensive than continuing to pay on accounts that will take years or even decades to be paid off.
- The Debt is Gone Forever Once the bankruptcy is discharged, you can say goodbye to that debt forever. It is truly a permanent solution. With other options, you might be paying for it for decades. If you decide to just stop paying your creditors, then the debt will remain your responsibility for at least seven years. Bankruptcy puts an end to the entire ordeal.
- There Are Not Tax Consequences It might seem great to have a creditor “forgive” your debt, but that forgiven debt is then considered taxable income. This means that you could end up owing thousands of dollars to the IRS, depending on the amount of the debt. Would you rather clear up the debt forever or get the creditor offer you back only to have the IRS come knocking?
Call Today for a Free Bankruptcy Consultation
If you are considering filing for bankruptcy, we invite you to contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free consultation. We can go over your finances, your financial plan, and your concerns. Call us now to find out how we can help.
