Though bankruptcy may seem an intimidating prospect to many debtors, bankruptcy may actually provide a way to escape the weight of debt and to rebuild one's finances. While not a cure for all financial situations, the bankruptcy process may allow a person to avoid the more dire consequences of debt. For example, the law allows creditors to sue for money owed. A successful suit of this kind can lead to wage garnishment or liens on assets, if the debtor cannot pay the amount awarded by the court. However, when a person files for bankruptcy, that action triggers an automatic stay against almost all collection actions. Most lawsuits already in progress must stop, and most creditors are prohibited from initiating new legal actions against the debtor.
The same is true for secured debt, such as a mortgage that is in danger of being foreclosed or an automobile that is about to be repossessed. The bankruptcy proceeding will usually not forgive the loan itself, but it can stop the foreclosure or repossession and allow the debtor to make up missed payments over an extended period of time. Similarly, bankruptcy will stop collection calls and allow the debtor to escape the cycle of regular minimum payments in favor of an organized payoff and, ideally, renewed control over his or her finances.