The biggest reason is a chapter 7 or chapter 13 bankruptcy is going to discharge your unsecured debts (there are exceptions). Although this list is not exclusive, exceptions include, fines or penalties, student loans, taxes, and domestic support obligations.
Another reason is bankruptcy will discharge your debt tax liability free. After your bankruptcy is said and done and you receive your discharge, you will not be penalized through the IRS or Minnesota Department of Revenue.
Collection efforts have to cease during the bankruptcy. Unlike debt consolidation or debt relief programs, where you can still be called and harassed for payment, after a bankruptcy is filed your creditors have to stop trying to collect the debt owed.
If you have civil judgments for unsecured debts (like credit cards and unsecured loans), your personal liability on the debt will be discharged in bankruptcy. Then after your discharge is ordered we may be able to help you remove the judgment from your record.
If you are behind on secured payments, such as a mortgage or vehicle loans, a chapter 13 bankruptcy can restructure your payments to catch up the arrears.
Please keep in mind, although bankruptcy is beneficial for a lot of clients, there are certain situations where filing may not be in your best interest. Please reach out to schedule a free consultation to go through your options and whether filing bankruptcy is the best option for you.
If you have any questions regarding bankruptcy and whether it is the right option for you and your financial situation, visit www.lifebacklaw.com to speak with an attorney today. You will be glad you did!