Though few people want to declare bankruptcy, many would benefit from doing so. We encourage you to contact Winterbotham Parham Teeple, a PC at 800.400.9000 for a consultation if you are just beginning to consider filing for bankruptcy in California. Continue reading to discover five of the benefits of bankruptcy in California.
- All Collections Are Stopped
- There Are Repercussions If Collections Continue
- There Are No Tax Repercussions
- Your Debt Is Gone For Good
- No Payments or Limited Future Payments to Creditors
Anyone falling behind on their payments is familiar with what it’s like to receive constant calls from creditors. It may be embarrassing, annoying, or even frightening. When you file for bankruptcy, your creditors must halt all collection efforts and only communicate with you through your attorney as required. All debtors, including the Internal Revenue Service, are subject to this.
While it may be the law that creditors stop phoning you, many creditors may merely choose to disregard the rule. If they do, they may be subject to heavy fines. They can be ordered to stop contacting you and fined by a federal judge once your bankruptcy counsel files a complaint with the court.
Even though it would sound wonderful to have a creditor “forget” your debt, doing so will result in taxable income. Unpaid and the forgiven portion of settled debts can be taxed as income if they exceed a certain dollar amount. Accordingly, depending on the loan size, you can owe the IRS thousands of dollars. If you file bankruptcy, that tax penalty can be avoided. Which would you prefer: The creditor canceling your debt, only to end up owing the IRS? Or permanent debt relief.
You can permanently put that debt behind you once the bankruptcy has been discharged. It is a long-term fix. With alternative solutions, it will be up to the creditor to decide if they are willing to work with you. If you simply decide to cease making your payments, the creditors will eventually sue you, resulting in wage garnishments, bank levies, or involuntary liens on your home. With bankruptcy, the entire situation comes to an end.
When filing for bankruptcy, most people are not required to make any payments to their creditors. Any dischargeable debt is simply wiped out and forgiven. If your situation requires you to make payments due to either excess assets or income, you will only be required to pay what you can afford or enough to protect the exposed assets. These payment plans are limited to 60 months, and you may only be required to pay a fraction of what you owe. After you complete your payments, the remaining debt is forgiven and discharged. This can be much less expensive than continuing to make payments on debts that will take years or even decades to settle.
Call Right Now for a Bankruptcy Consultation in California
We encourage you to contact Winterbotham Parham Teeple, a PC at 800.400.9000 for a consultation if you are considering filing for bankruptcy. We can discuss your finances, financial goals, and worries. To learn how we can assist, call us right away.