Relief from debt collection efforts

When you file your paperwork with your local bankruptcy court, the automatic stay goes into effect. This rule prevents debt collectors from contacting you, and you now have legal protection from creditors seeking repayment. If creditors still attempt to contact you, the courts may penalize them. If a debt collector contacts you, give them your bankruptcy case number.

Erased debts.

Chapter 7 bankruptcy can alleviate the stresses of repaying many common types of debt, including that associated with credit cards, cell phones, utilities, personal loans, and lawsuits. The obligation to repay these debts is removed once the court enters your bankruptcy discharge. Some debts, however, cannot be discharged, including:

• Student loans
• Child support
• Alimony
• Government judgments and penalties
• Some housing fees
• Some tax obligations

Improve your credit

This is especially crucial because most Chapter 7 bankruptcy filings are for individuals with credit scores below 600. By providing debtors with a clean slate, they can then re-establish themselves financially with a variety of strategies, including:

• Procuring a secured credit card
• Becoming an authorized user on another person’s credit card
• Making and adhering to a budget