If you are facing financial difficulties, bankruptcy can provide you with a way to pay off some of your debts over time or even eliminate them completely. Declaring bankruptcy will give you an automatic suspension, which means that your creditors will be blocked from trying to collect the debt. When you apply for bankruptcy protection, a judicial release will exempt you from having to pay certain debts to your creditors. Once the debt is canceled, your creditors won't be able to contact you or attempt to collect it in any way.
Debt forgiveness is also permanent and final for all unsecured debts that are included in your bankruptcy filing. Your case will be decided by a bankruptcy judge, based on the information that you have provided. If the court finds that you have tried to hide assets or have committed other types of fraud, you may not only lose the case, but you may also face criminal prosecution. In most cases, you won't have to appear before the judge in court.
Before deciding to file for bankruptcy, it's important to understand what happens when you declare bankruptcy in the US. There's no doubt that if you have serious debt problems, filing for bankruptcy can be a powerful solution. It stops most lawsuits, wage garnishments and other collection activities. It also eliminates many types of debt, including credit card balances, medical bills, personal loans, and more.
If you have large debts that you can't pay, are behind on your mortgage payments and are in danger of foreclosure, are being harassed by bill collectors, or have done all of the above, filing for bankruptcy could be your answer. People who participate in more than 95% of all Chapter 7 bankruptcies filed in the United States keep all their belongings. Debts for money or property obtained under false pretenses, debts due to fraud or defamation acting in a fiduciary capacity, and debts for deliberate or intentional injury committed by the debtor to another entity or to the assets of another entity will be liquidated unless the creditor timely files and prevails in an action to have such debts declared taxable. You can also hire a bankruptcy lawyer to defend you and help you deal with the complicated process of what happens if you file for bankruptcy.
Your lawyer will help you understand what happens if you file for bankruptcy and what debts were canceled when you filed for bankruptcy, as well as those that you might still be required to pay.