You may consider filing bankruptcy or not when you decide to address your financial issues. Bankruptcy is a legal process through which debtors can pay off their debts and get a fresh start. While the bankruptcy process involves some difficult choices, there are also 7 advantages of going through with it.
Table of Contents
- 1. You May Obtain a Fresh Financial Start
- 2. Provide Emotional Relief
- 3. Your Property May Be Protected
- 4. Automatic Stay
- 5. You’ll Not Be Fired Simply Because You Filed for Bankruptcy
- 6. Bankruptcy Can Prevent Further Legal Action From Creditors
- 7. The Stigma Around Bankruptcy Is Often Overstated
- Final Thought
1. You May Obtain a Fresh Financial Start
Bankruptcy is a powerful tool to help debtors begin anew with their finances. Through bankruptcy, you can discharge many of your debts and create financial freedom going forward if you are eligible for Chapter 7.
This can be essential for those struggling with medical bills, credit card bills, and other types of unsecured debts. Bankruptcy does more than just reduce the amount of debt you owe, it also gives you a chance to rebuild your credit.
2. Provide Emotional Relief
Juggling creditors and debt can be stressful, especially for those facing large amounts of debt with no clear solution. Furthermore, long-time stress will have a negative impact on your health and will hurt your family relationship.
Bankruptcy can provide emotional relief from stress and anxiety because it eliminates some – if not all – of your financial obligations.
3. Your Property May Be Protected
Filing for bankruptcy may help protect your property from creditors. In most cases, filers are able to keep their homes and cars. This is because there are laws in place that allow filers to exempt certain types of property from their bankruptcy proceedings. As long as you are able to make your payments, you can avoid repossession of these assets.
4. Automatic Stay
When you file for bankruptcy, the court issues an automatic stay. This puts a halt on all collection activities, including harassing phone calls and lawsuits from creditors. The automatic stay also prevents creditors from garnishing your wages or taking other forms of legal action against you. This allows you to focus on rebuilding your finances without being harassed by creditors.
5. You’ll Not Be Fired Simply Because You Filed for Bankruptcy
Bankruptcy may impact your employment, but it cannot be the sole reason for termination. Under federal law, employers are not allowed to fire someone simply because they have filed for bankruptcy. Also, many states also provide additional protection against job discrimination due to bankruptcy.
6. Bankruptcy Can Prevent Further Legal Action From Creditors
Bankruptcy can also prevent creditors from taking further legal action against you. This includes lawsuits, judgments, and wage garnishment. If you have debts that are discharged through bankruptcy court, these cannot be pursued by the creditor in any other way. Therefore, bankruptcy serves as an effective shield between you and future creditor actions.
7. The Stigma Around Bankruptcy Is Often Overstated
While filing for bankruptcy can have a negative impact on your credit score and your ability to get future loans, it isn’t necessarily the end of the world. In many cases, individuals are able to rebuild their finances after filing for bankruptcy. With careful management, you may be able to restore your credit score over time and become financially stable once again.
Final Thought
Overall, filing for bankruptcy is a serious decision that should be carefully considered before proceeding. But as several benefits listed above, it can provide tremendous relief if you’re struggling with unmanageable debt, allowing you to obtain a fresh financial start and protect your assets from creditors.
With careful planning after filing for bankruptcy, you’re able to rebuild your credit and become financially stable over time.
