If your debt has spiraled out of control and you are faced with bankruptcy, learn your rights and how to cope.
Since its inception, the bankruptcy code was designed for one purpose. to help relieve Americans from the shackles of endless and unmanageable debts. Before the bankruptcy code came about, people went to debtor’s prison. We all know we can’t pay many bills while incarcerated. So the law was written to give people a way out with the opportunity to have a new beginning.
Aside from the attorney fees of up to $2000.00, and appearances in court, bankruptcy is no trip to Disneyland. The filing becomes a matter of public record and the mark stays on your credit file for 10 years. The mark proclaims to the world, “I had no other solution to my debt burdens and neede to seek protection.” This is why lenders are concerned when they see this notation. It makes borrowing in the future a bigger challenge and the interest rates that your are charged by creditors are not favorable whatsoever.
When you have exhausted every avenue possible, and you simply cannot make your payments, it may be time to consider the protection from the court. The filing of a bankruptcy will stop a foreclosure immediately. Mortgage companies must cease all collection and legal activity by law. In a chapter 13, a trustee is appointed who will distribute money from your salary to go to all of your creditors in a plan that is manageable for you to afford. You will pay your mortgage payment each month as you did before you ran into trouble, with no increase to the payment. The pay plan will continue for 3 to 5 years depending on the amounts you owe and how far behind you are in payments.
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