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Frederick J. Brynn, P.C.

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People from whom you have borrowed money may have seemed friendly and helpful in the beginning. However, now that you are having difficulty paying your bills, your creditors may seem more aggressive and impatient. If your creditors are causing you trouble or stress, and you don’t know how to deal with them, filing for bankruptcy may be the answer. Here are a few of the ways bankruptcy can help you with creditors.

1. Making an Arrangement

Many people try to negotiate alternative arrangements with creditors before filing for bankruptcy. Most of the time, the creditors are willing to meet you halfway. However, sometimes you cannot convince them to agree to an arrangement that works well for you. Filing for bankruptcy means that the way to deal with your debt is now a matter for the court to decide, and your creditors must abide by its decision. Most creditors know that they stand to lose money if you file for bankruptcy. Therefore, merely informing them that you are thinking about filing may motivate them to negotiate a better arrangement with you.

2. Preventing Harassment

Creditors can be very annoying in contacting you to collect the money that you owe. Sometimes it rises to the level of harassment. When you file for bankruptcy, the court stops all collection activities and communication attempts by creditors with a court order called the automatic stay. This means that your creditors must now take their grievances to the bankruptcy court. They are not allowed to contact you as long as the automatic stay remains in effect.

3. Discharging Debts

When you file for bankruptcy as an individual consumer, your debts are usually discharged after either liquidating some assets or complying with a repayment program for a period of three to five years. At that point, you are not responsible for paying any remaining balance that you owe to any of your creditors. Even in a liquidation bankruptcy like Chapter 7, at least some of your assets are exempt and cannot be sold. It often happens that all of your property is exempt, meaning that you can break free of your debt without losing any of your assets.

Bankruptcy is not as scary as many people believe it to be. It is not intended as a punishment but as a means of rehabilitation. However, it does have consequences, such as damaging your credit, so it may be prudent to avoid filing until all other debt-relief options have been exhausted. One of our attorneys like a chapter 13 bankruptcy lawyer at the office of The Law Office of Michael A. Ziegler, P.L., can help you with the next steps.

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