Bankruptcy: Taking Full Advantage of an Automatic Stay

When you file for bankruptcy, an action called an “Automatic Stay” immediately takes effect, which halts any actions made by your creditor against your property, including lawsuits and wage garnishments. This action can be extremely useful for someone who’s at risk of being foreclosed on, being evicted, or losing basic services such as utility services, unemployment benefits, or a job. As such, the Automatic Stay offers a very compelling reason to file for bankruptcy.

There are ways for creditors to get around the Automatic Stay, however. One way they can do so is to ask the bankruptcy court to lift the stay because it is not serving its intended purpose. For instance, imagine that you file for bankruptcy before your property is to be sold in foreclosure. If your creditor requests to have the stay lifted, the bankruptcy court will likely grant that request because you’re in a position where you have no equity on the house and you have no means of keeping the property.

To take full advantage of the benefits of an Automatic Stay, and to prevent your creditors from getting around it, it behooves you to have a good lawyer to represent you in bankruptcy court.

Chapter 13 or Chapter 7? Take Your Pick Carefully

Like any other sensible person in Utah, you’d want to avoid bankruptcy as much as possible by spending wisely and settling your debts early. However, in case that you do get bankrupt despite everything, it will help if you know the difference between a Chapter 7 and a Chapter 13 bankruptcy. Choose which of these options you’ll take wisely, and paying for your debts and riding the road to recovery will be a lot simpler than you’d think. Of course, don’t forget to find reputable bankruptcy lawyers in Utah to help you out.

If your income is less than the median income of a typical household in the state, you can file for a Chapter 7 bankruptcy. This frees you from all debts by allowing your creditors to liquidate any of your assets as payment. However, some assets are considered exempted from debt, so it will help to have a lawyer who would know which of your items are exempted and which aren’t. On the flipside, you can only file for a Chapter 7 every eight years.

A Chapter 13 bankruptcy, meanwhile, will allow you to pay off your debts throughout a period of three to five years if your income is above the median income in Utah. People who lagged behind their mortgages or car loans can file for a Chapter 13 rather than a Chapter 7. None of your assets will be seized, although you will be forced to adopt a strict budget to pay for your debts.

Mapping Your Road Map to Recover From Debt

Debt getting you down? A debt dilemma can be overwhelming, regardless if it is an offshoot of a prolonged illness, unemployment or overspending.

Trouble with bill payments?.

Talk with your creditors about adjusting payment plans. Affordable credit counseling services can also help you and your creditors agree on debt settlement. You'll be required to deposit money monthly with the counseling service, which they'll give to your creditors.

If you have tried these alternatives and you still carry more debt than you can pay back, it's time to file for bankruptcy.

Bankruptcy should be your last resort.

Under federal law, bankruptcy is a legal status where you can get a fresh start. Though useful, bankruptcy shouldn't be used to run away from debt. Every case of bankruptcy is unique so consult a qualified and experienced bankruptcy lawyer who can advise you about your options, and what each can do for you. Your bankruptcy lawyer will help you prepare your petition, file it to the court, communicate with your trustee and represent you at your Meeting of Creditors.

Qualifying for Chapter 7 bankruptcy or liquidation may clear you from your debts but you must give up some of your nonexempt property, such as stocks and family heirlooms, which may be sold by your trustee or turned over to your creditors. Chapter 13 bankruptcy or reorganization, on the other hand, allows you to keep valuable property, such as your home or car, as long as you pay off your debts within 3-5 years.

Are There Advantages to Bankruptcy?

Bankruptcy, as it is, is a term no one wishes to hear. In its simplest sense, filing for bankruptcy is one way of dealing with debts you no longer have control over. Inability to manage your own debts would push one to look for a certified bankruptcy lawyer for expert advice.

A good bankruptcy attorney in Salt Lake City is not hard to find. But first, the key is to decide whether this is the direction you want to go. While it is apparent that bankruptcy would greatly affect how financial services deal with you, there still are things that you can identify as “advantageous” to your situation.

For one, it allows you to have the time to restructure your finances without creditors breathing down your neck. Most of the time, a person makes the wrong decisions when pressured or is put under duress by the creditors. Some opt for debt consolidation, but this only works out as a temporary reprieve, particularly when no concrete plan for repayment is in place.

With a legal order basically telling your creditors to back off, you have the opportunity to get yourself out of the financial hole you are in. There will always be room for a brand new start, and the goal is for you to recover so you can be in a healthier financial state.

Of course, filing for bankruptcy should not be taken lightly. The important thing is that you learn to sort out your debts in the process.