One of the worst aspects of getting into debt you cannot afford to pay back is the constant attention from creditors. They may contact you themselves or pay a debt collection firm to do it. It can leave you scared to answer the phone, open the door, check your emails or messages.
Bankruptcy can put a stop to that. The moment a court accepts your filing, creditors are no longer permitted to contact you. Or at least some of them are not.
Bankruptcy does not get rid of all debts
Some debts are excluded from a Chapter 7 bankruptcy filing. These include:
- Student loan debt
- Outstanding child support
- Some outstanding taxes
- Some monies a court has awarded you to pay to another party
So you can still expect contact from the companies chasing those outstanding payments.
So what is the point of bankruptcy if it will not clear all my debts?
Let’s say you have $2,000 of debt repayments that you need to make each month. While you cannot afford all of it, you hopefully can repay some of it. By filing for bankruptcy and having unsecured debt such as credit card bills, unsecured loans and medical bills erased, you might bring your remaining debt obligations down to, say, $800 per month. It is far more achievable than $2,000.
A Chapter 7 bankruptcy is the chance for a fresh start. If you reduce your debts to a figure you can cope with, you can plan to pay them off. As soon as you start doing that, and provided you stick to your schedule, creditors should no longer need to contact you. Finding out more about filing for bankruptcy and getting assistance to talk to your creditors will be crucial to a more peaceful future.