Deciding whether or not to declare bankruptcy is never an easy decision to make. Bankruptcy has a lot of negative associations; however, filing for bankruptcy is not as taboo as it once was. Yes, it will affect your credit score and your reputation with lenders but, it also provides considerable relief for those who are buried in unmanageable debt. Even though there are disadvantages to filing bankruptcy, there are many advantages that outweigh the disadvantages. Below is a list of some of the benefits of filing for bankruptcy.
Creditor Calls & Threats Will Screech to a Halt
Declaring bankruptcy means all the harassing phone calls from creditors, foreboding letters, repossessions, canceled credit cards, and lawsuits will come to a screeching halt. Once you file for bankruptcy you start on your journey to a fresh start. From the moment the petition is filed you enter an automatic stay period which forbids creditors to contact you, and if they do the court can penalize them.
All or Most of Your Debt is Discharged
Dependent on the type of debt once you complete your bankruptcy all of your debts will be discharged. This discharge releases a debtor from personal liability for the specified debts aka the debtor is no longer legally required to pay off any debts that are discharged. Unfortunately, some debts cannot be eliminated like student loans, most federal, state, and local taxes, child support, and alimony.
You’ll Get a Fresh Financial Start
After your debts are discharged, your slate has been wiped clean. You can now start on a new journey of financial freedom. During this time it is wise to begin thinking smarter when it comes to finances. The best advice is to create a budget and stick to it. A budget will help you make wiser purchasing decisions and keep you away from falling into debt again.
No matter the reasoning behind the decision of whether or not to file bankruptcy make sure it is the right decision for you, and in some cases your family. Bankruptcy is not a quick decision. It is better to know all the facts and have your ducks in a row before proceeding. If the decision is to file bankruptcy, then the good news is you have started on the path towards financial freedom.
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Written by: Rebecca Kidd