3 Ways Filing For Chapter 7 Bankruptcy Can Protect You

If you are way over your head in debt, and you have creditors coming after you, filing for Chapter 7 bankruptcy can help protect you from legal actions. It can help protect you against litigations, wage garnishments, and foreclosures.

#1 Litigation

If a creditor has sued you in court, filing for bankruptcy is one way to protect yourself from the legal costs of fighting the creditor in court. Filing for bankruptcy will stop the court action against you and will prevent the creditor from obtaining a legal judgement against you. A legal judgement can give the creditor rights to your property, such as your car or your home, as a way of settling your debt. They can be given these rights even if the value of your property is greater than the amount of debt that you owe them. Bankruptcy will protect you from the legal costs of defending yourself and will safe-guard your property.

#2 Wage Garnishment

When you fail to pay your debts, a creditor can come after you in a variety of ways. They can get the courts to issue a wage garnishment against you. That will require your employer to take money out of your paycheck and use it to pay your creditor. Depending on how the wage garnishment is set up, your employer may be obligated to turn over your entire paycheck or just a portion of it.

Your creditor can also get a bank levy put against you. With a bank levy, your creditor can deduct up to the entire amount of your debt from your bank account. That means you can unexpectedly find your bank account empty when a creditor issues a bank levy against you.

Entering into the foreclosure process would stop any such action like this against you. The creditor would no longer be able to garnish your wages or put a levy on your bank account.

#3 Foreclosure

If your home was put into foreclosure, you may be able to buy yourself more time. You may be able to temporarily stop the foreclosure process and get to stay in your home for a longer period of time. Although you may be able to work out a payment arrangement with the bank, the foreclosure process will start up again as Chapter 7 bankruptcy is not designed to help you save your home from foreclosure. If you want to reverse the foreclosure process, Chapter 13 bankruptcy would be a better choice for you.

If you want to protect yourself against litigation, wage garnishments, bank levy's, and foreclosure, filing for Chapter 7 bankruptcy will halt those legal proceedings while you get your debt under control. Contact a bankruptcy lawyer for more information and assistance.