In many cases, bankruptcy can stop foreclosure. Immediately upon filing, an automatic stay is entered in most bankruptcy cases. The stay puts a stop to collection action, including foreclosure.

Depending upon the type of bankruptcy, the past due balance, available income and other factors, the stay itself may allow adequate time to catch up or a Chapter 13 repayment plan may break up the past due balance into monthly payments over three to five years.

The automatic stay that’s entered as soon as most bankruptcy cases are filed stops wage garnishment instantly. Then, depending on the type of bankruptcy and the nature of the underlying debt, the obligation to pay may be entirely eliminated or the debt may be included in a manageable monthly repayment plan. Either way, the garnishment is eliminated for most debts.

Typically, when a bankruptcy case is filed, an automatic stay goes into effect immediately. The automatic stay freezes all collection action, including automobile repossession. Depending on the value of the automobile, the equity in the car, the amount owed and other factors, various solutions may be available. Some possibilities include surrendering the vehicle free of any debt on the loan, redeeming the vehicle for market value (which may be less than the outstanding loan) and catching up past-due payments in a Chapter 13 repayment plan.

Depending on the complexity of the case, a Chapter 7 case may be completed in as little as 4-5 months. A Chapter 13 bankruptcy case involves a repayment plan that lasts for between three and five years, and may be completed very soon after the final payment is made and the required financial education course completed.

Bankruptcy may remain on your credit report for up to ten years. However, if you’re considering bankruptcy, chances are good that your credit is already in bad shape. In many cases, bankruptcy is the first step toward improving credit. Many past-due balances can be eliminated, reducing or even eliminating outstanding debt. And, late payments on discharged accounts begin to recede into the past, meaning that they carry less weight and eventually drop off of your credit report. Most people who manage their finances responsibly after bankruptcy can begin rebuilding credit almost immediately, and can often qualify for major financing such as a home loan in about two years.