Declaring Bankruptcy to Eliminate Debt

Depending on the types of debt you have, bankruptcy may be an options to discharge some of these financial obligations.  In order to discharge debt through bankruptcy, debtors and bankruptcy courts must first determine what types of debt are still outstanding.  From there, they can ascertain whether or not a given debt is dischargeable under Chapter 7.  Some debt, such as government loans, child support, alimony, and back taxes are not dischargeable debts, which will not be erased during bankruptcy.  However, the vast majority of consumer debts, such as credit cards and medical expenses among a litany of other items, are dischargeable debts.

How Bankruptcy Stops Wage Garnishments

Aside from eliminating debts, bankruptcy claims can immediately stop wage garnishment from creditors until a bankruptcy case is resolved.  In the event that a debt declared eliminated, the wage garnishments will cease.  Even in cases of wage garnishment due to non-dischargeable debts, a repayment plan can be arranged, which does not entail wage garnishment.  In essence, simply filing a petition at the very least temporarily for bankruptcy stops wage garnishments.

Effect of Bankruptcy on Your Credit Score

Although bankruptcy, in the case of Chapter 7 filings, can erase some outstanding debts, the individual declaring bankruptcy by no means enjoys a clean financial record.  Credit reports note bankruptcy filings for up to ten years in cases of individuals, and in turn, this filing will severely limit one’s ability to obtain financing in the future.  However, with good financial habits, most debtors find themselves with significantly higher credit scores shortly after their bankruptcy filing when compared to before their declaring bankruptcy. 

How a Bankruptcy Attorney Can Help

Bankruptcy attorneys, if consulted before petitioning the courts, are an infinite resource of information and strategy regarding your bankruptcy case, which can ultimately be the deciding factor in whether your bankruptcy filing achieves a favorable outcome.