Bankruptcy: Salvation in a Financial Storm

Hardships, such as illnesses, layoffs and market declines can happen without warning. When they happen, your otherwise stable lifestyle can become like a sinking ship.

Your creditors, who used to be your safety nets and allies, become like thunder, lightning, waves and wind. They--with their collection calls and lawsuits--toss you around, heartlessly reminding you of your precarious condition.

Bankruptcy can be your salvation. It can help you abandon your sinking ship and safely make it to calmer waters. Or, it can enable you to fix your ship, and slowly make your way out of the storm.

Bankruptcy offers what's called the automatic stay. The automatic stay puts a stop to virtually all creditor collection activities. It stops the thunder, lightning, waves and wind. The automatic stay goes into effect the moment you file bankruptcy. Your home could be scheduled for foreclosure tomorrow morning, and the automatic stay would stop it. It's that powerful.

If you want to abandon ship, Chapter 7 bankruptcy may be the answer. Chapter 7 bankruptcy is sometimes called liquidation bankruptcy, because it involves allowing the bankruptcy trustee to liquidate, or sell, your nonexempt property and use the cash to pay your creditors. Nonexempt means unprotected. The law protects certain assets from the trustee, meaning you can keep them even if you file bankruptcy.

At the end of a Chapter 7 bankruptcy, your dischargeable debts are declared forgiven by law.

If you want to fix your sinking ship, Chapter 13 bankruptcy may be the answer. Chapter 13 allows you to keep all your property and get caught up on past due debt by paying your creditors through a court-approved payment plan. As long as you're making your payments, you can stay afloat financially, and eventually get back to financial safety.

Some people look down on bankruptcy as ifs it’s somehow immoral. However, for those whom bankruptcy laws were designed to help, bankruptcy is about survival, and there’s nothing immoral about that.

LEGAL DISCLAIMER: This blog’s content is not legal advice and does not create an attorney-client relationship. All information posted on this blog is intended to provide general information to the general public and not to any specific individual. If you require legal advice, please consult an attorney licensed to practice in your state. Ms. Seaborn is licensed to practice law in Georgia. You may contact her via e-mail at sdseaborn@attorneyseaborn.com.