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Benefits of Filing For Bankruptcy
Sometimes it becomes very difficult to pay back the loan you have taken when the amount goes beyond your capacity to repay. It becomes even more difficult when the debt goes to collection agencies. In a situation like this, consumers should seriously consider applying for bankruptcy.
Bankruptcy will not only stop the lenders from taking any further action, but it can also help you save whatever money you have left. You can start taking fresh loans without any burden of past debt on you to rebuild your credit.
Many people apply for bankruptcy due to wage garnishment. If the lender garnishes the person’s wages, he will not be left with the money required for his household expenditures. Once he files for bankruptcy, wage garnishment can be stopped immediately.
When the lender takes money out of a debtor’s bank account, it is called a bank levy. If the lender wins a lawsuit against the person who has taken the loan, he can take permission to levy the debtor’s bank account. The lender can levy the bank account till the total amount of loan is paid completely. If the debtor files for bankruptcy, the bank levy will be immediately stopped and the lender can no longer take money out of debtor’s bank account.
When the debtor fails to pay the monthly payment due for the loan he has taken, the lender will start sending letters to demand payment. Collectors will also begin calling, which can make life very miserable. Bankruptcy filing will immediately stop the lender from attempting to collect the debt. Lenders are not supposed to call or send e-mails to the debtor regarding the collection of debt once the debtor files for bankruptcy.
The lender cannot initiate or continue a lawsuit against the debtor, once the debtor files for bankruptcy.
Filing bankruptcy will help the debtor save the house from going to foreclosure. Since the house is kept as security with the lender, the debtor cannot claim the ownership of the house till he pays up the entire loan amount. The debtor will get some time to pay up the loan after filing bankruptcy.
During this time an agreement can be reached between the lender and the debtor regarding reinstatement of the home loan. Once the agreement is reached the monthly payment of the loan can be restructured and also he need not pay the late payment charges. The lenders are normally ready for such agreements since they are interested in getting as much of their money back as possible.
Do you have questions about filing for bankruptcy? By calling 312-273-1217 from anywhere in the Chicago area, you can set up a totally free appointment with an experienced lawyer in your area today!
By Kerrie Neal