There is no benefit to creditors if you file for bankruptcy. They make their money by keeping you in debt. That’s why they don’t want you to know that you have the right to have most, if not all, of that debt forgiven under federal law. And, you can get out of debt for a fraction of what you’d pay creditors or debt settlement agencies – and in a lot less time. 

What else are your creditors hiding from you about bankruptcy relief? 

Bankruptcy and Debt Settlement Are Not the Same Things

If a creditor sees you heading for bankruptcy court, they may look for options to help you out, like debt settlement. That might be the best choice for some, but it means paying some debt back. 

Bankruptcy is the most effective way to eliminate your debt, though. Debt settlement doesn’t eliminate debt. You pay a set amount of money to a debt settlement company, and they hold it until you have enough to start paying creditors. In the meantime, they continue to report your delinquencies, and your credit continues to suffer. 

Your credit will also suffer from bankruptcy, but within just a few years, you’ll start to see your rating rise. And, you don’t pay back most of the debt/ That is money you can save and use to get back on your feet. 

Bankruptcy Puts You In Chargebankruptcy attorney georgia

Creditors have all the power when you owe them money. It permits them to harass you at will. That changes once you file bankruptcy.

When a debtor declares bankruptcy, creditors must immediately cease collection attempts. Consider it like acquiring the home-court edge. Bankruptcy courts are often favorable to debtors. And creditors must follow a series of guidelines that favor giving debtors a fresh start.

You Don’t Lose Everything When You Declare Bankruptcy

Some automatically assume that they will lose their house, car, and retirement savings if they declare bankruptcy. The truth is the court protects many of your assets. There is a lot of paperwork, and it takes time to work your way through the bankruptcy system, but in the end, you’ll come out with no debt and still maintain your property. 

Creditors will sometimes feed you misinformation to scare you, so you will not go that route. If you file bankruptcy, though, you stop creditor judgments and collection efforts and keep most if not all of your property. 

There Is No Jail Time When You File for Bankruptcy

The days of putting people in debtors’ prison are long behind us. Creditors want you to be scared, though, so they will tell you anything, including that you might see the inside of jail if you file.

You will go to court when you file bankruptcy but not jail. The court will go over the rules with you, ask some questions, and then you go back home and wait for them to discharge your case, relieving you of your debt.

You Must Give Up Your 401K If You File

Another lie that creditors use to scare people away from the bankruptcy court. Creditors don’t want you to realize that tax-deferred retirement funds (401(k), 403(b), IRA, and PERF retirement accounts) are completely safe in most cases. 

Many creditors and debt settlement agencies may advise you to take cash from these accounts to pay your bills rather than file for bankruptcy. Withdrawing funds results in them losing their special protected status, though. In addition, fines, fees, and taxes may be imposed. Bankruptcy can allow debt to be discharged while keeping these accounts completely intact.

Bankruptcy Doesn’t Ruin Your Credit

It is a common misconception, one that often comes from creditors. Bankruptcy will reduce a person’s credit score by around 50 points. However, credit scores soon recover and even increase due to the default.

Things that were dragging your credit score down, like defaulted accounts and late payments, are gone so that you can rebuild back better and stronger. 

Don’t listen to what the creditors tell you about your debt or bankruptcy. Talk to someone with your best interest at heart before deciding the best way to handle your overwhelming debt.