The COVID-19 (coronavirus) pandemic has impacted everyone. Unemployment numbers are at heights not seen since the era of the Great Depression and many families are struggling to make ends meet. Some might even be considering filing for bankruptcy. Filing for bankruptcy has a negative connotation; however, the reality is that the most common reason why people file for bankruptcy is medical debt. If you are considering filing for bankruptcy, you need to know how this will impact your family. There are a few key points that you should keep in mind.
This Will Install a Stay Against All Creditors
After you file for bankruptcy, the court is going to issue a stay against all debt collection activity. Now, it is important to note that this will not cancel your debt; however, it will suspend any and all debt collection activity until your bankruptcy case is concluded. This means that you will no longer receive:
- Letters or calls from any debt collectors
- Lawsuits filed against the debts
- Garnishment of any wages
- Foreclosure warnings on your property
- Threats from repossession men
Anyone who tries to collect on a debt after a bankruptcy declaration has been filed opens up himself or herself to court sanctions. This can provide your family with immediate stress relief, helping everyone relax as the process takes its course. Many families feel like a weight has been lifted off of their shoulders.
Debts Can Be Discharged
Another impact of filing for bankruptcy is that many debts can be discharged. This means that you will no longer have to pay back a significant portion of the debts you owe. It is important to note that not all debt can be discharged; however, some of the most common dischargeable debts include:
- Credit card debt
- Medical bills
- Utility bills
- Some personal loans
This can alleviate a massive strain on your finances, helping you see a light at the end of the tunnel.
Credit Scores Will Improve
There is a common misconception that filing for bankruptcy will hurt your credit score. While it is true that a bankruptcy declaration will usually stay on your credit report for seven years, you will often receive letters for loan solicitation immediately after filing for bankruptcy. This is because there is usually a net positive that comes with discharging a significant amount of your debt. This can help you move forward with a clean slate, allowing you and your family to start rebuilding your credit and your lives.
Contact Santan Family Law Today
If you are considering filing for bankruptcy, you need to have a legal professional who can walk you through this process. At Santan Family Law, we understand the stress that comes with a bankruptcy filing. We will make sure that you discharge as much of your debt as possible, allowing you to settle your debt and move forward with your life.
Contact us today to learn more about how we can help you!