Bankruptcy can prevent future judgment liens. It usually stops a lawsuit from turning into a judgment, and then a judgment lien on your home.
What happens if you list a creditor in your bankruptcy case but, unknown to you, it sold the debt to a collection agency that you don't list?
Usually if you don'='t list a debt, it doesn't get discharged. An exception is if the creditor still learns about your case, on time.
A "preference" makes more sense when you see an example. Here's one. This also helps explain how to avoid creating one.
Filing a Chapter 7 or 13 case both stop creditor collection actions against you just the same. But after that the differences are huge.
Here's an example why to keep an open mind about filing under Chapter 7 vs. Chapter 13. Slightly different facts can make all the difference.
The laws about the treatment of different types of creditors can often be used in your favor to pay who you want or need to pay.
Make your bankruptcy trustee work for you by retrieving your recent payments to, or garnishments by, creditors--to your benefit.
Avoid the frustrating surprise of having one your friendly creditors be challenged by your bankruptcy trustee with a preference action.
The trial, almost always in front of a bankruptcy judge and no jury, is the final determinator whether the challenged debt gets discharged.
Sometimes it's in your best interest to force an issue in bankruptcy court by, in effect, suing a creditor in an adversary proceeding.
Chapter 13 payment plans usually have you pay something to all of your creditors. But not necessarily. Certain creditors may get nothing.
In most Chapter 7 cases, there is not much practical effect to what creditors put on their proofs of claim.
Creditors sometimes have grounds to ask for permission to resume or start collection action against you in spite of your bankruptcy filing.
Bankruptcy is a lot easier to understand and much more comfortable to go through when you know who's who.