Bankruptcy is a legal remedy that a person facing extreme financial difficulties can use to get a brand new start. Federal law guarantees the right to file, and the federal court handles all bankruptcy cases. Once you file for bankruptcy, all your creditors are barred from demanding payments from you until such time that your debts have been sorted out based on the law.
What Bankruptcy Can Do
When you file for bankruptcy in Salt Lake City, Utah, you can:
- Remove your legal obligation to pay all or most of your debts – This process is known as debt discharged. It allows you to have a new lease on your financial life.
- Stop repossession or foreclosure orders – Your creditors cannot repossess your car and other properties, or foreclose you home. This way, you can make up for your missed payments. You also have the option to give the asset back, instead of paying for your arrears.
- Stop harassment – Wage attachments, harassment by collectors, and other similar tactics are eliminated.
- Prevent termination or restore utility service – When you file for bankruptcy, you may continue enjoying various utility services.
- Challenge creditors – You can challenge your creditors who defrauded you, or who may be forcing you to pay more than what you actually owe.
What Bankruptcy Cannot Do
Keep in mind that bankruptcy is not for everyone, and it is not a cure-all solution to your financial problems. Here are some of the things it can’t do:
- Remove specific obligations to secured lenders – If you secured a loan with collateral, such as your car or home, you can’t keep your collateral if you fail to update your debt repayments.
- Discharge specific obligations determined by the law, such as alimony, child support, and other divorce-related obligations, as well as most types of student loans, criminal fines, court restitution orders, and certain taxes.
- Protect your co-signers on debts – If your loan has been discharged through bankruptcy, your co-signers may still be liable to pay part of or the entire loan.
- Discharge post-bankruptcy debts – Debts that you incur after filing for bankruptcy will remain as legal obligations that you have to pay.
Bankruptcy is indeed a good option when you are experiencing financial troubles. Understanding what it can and cannot do will help you come up with an informed decision on whether or not it is the right move for you.