What benefits should I expect from filing bankruptcy?

Bankruptcy benefits will vary from case to case significantly. However, the following outlines the general benefits debtors may receive under the bankruptcy process. These benefits will be subject to the chapter of bankruptcy filed, the type of debts owed, and the specific goals or intent of a given debtor by filing bankruptcy.

• Automatic Stay: Under bankruptcy laws, a debtor receives a temporary reprieve from any collection attempts made by creditors, which may cease wage garnishments, other liens, and in many cases, at least temporarily, stop the foreclosure process. This protection occurs in any bankruptcy filing, including Chapter 7 and Chapter 13.

• Under Chapter 7: In Chapter 7, a debtor will receive the benefits of discharging any unsecured debt obligations. Additionally, while Chapter 7 does incur liquidation of most assets, the debtor will receive benefits under each individual state’s exemptions list, which allows the debtor to retain certain types and amounts of property.

• Under Chapter 13: A debtor is allowed to reorganize his finances in a manageable manner, including creating a manageable plan of repayment of debts under the court’s supervision. Assuming a debtor adheres to the Chapter 13 plan; creditors cannot make any collection attempts or lien on any assets. Depending on the case, this may allow a debtor to retain his or her home, wages, and other property. In limited circumstances, a debtor may also incur a hardship discharge at the end of the Chapter 13 process.

For more information and insight into how the bankruptcy process may influence your current financial status, including an accurate depiction of the potential benefits and detriments, it is imperative you consult with a bankruptcy lawyer in your state of residence.