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If you are someone that has been struggling with financial difficulties for a long time, you may think about filing for bankruptcy. Of course, your initial question is probably whether this is even a right choice for you. There are so many variables to consider, and filing for bankruptcy doesn’t automatically mean all of your debts just go away. Additionally, your bankruptcy status will remain on your credit report for a decade and you will have to work on getting your credit score back up. Because many people have misconceptions about what bankruptcy entails, it is strongly advised that you speak with a bankruptcy lawyer before starting the process.
What Are The Benefits of Bankruptcy?
If you are overwhelmed with debt, your debts are more than your earnings, you are not able to meet minimum requirements, and there are no signs that your income will increase in the near future, then you may want to consider filing for bankruptcy. If you decide to recruit a lawyer to help you along the way, you will probably find that their services give you a peace of mind about what is to come. Your lawyer can answer questions, help you complete paperwork, and address concerns. Here are the potential benefits of filing for bankruptcy:
Your Debts Can Be Eliminated
If you have substantial debts that you are not able to pay on your own, by filing for bankruptcy you are taking action to eliminate at least a portion of your debts. Depending on the chapter you file for, you may liquidate your property to pay off creditors, or have to follow a 3-5 year repayment plan based on what you can afford, for all or a percentage of your total debts.
Foreclosure and Repossession Can Be Stopped
If you are facing a repossession or foreclosure, you can halt the process through an automatic stay that goes into effect after filing your bankruptcy petition. After submission, all collection attempts and related actions are paused for a period of time. This gives you time to organize your finances and prepare for the next step.
Creditor Lawsuits Are Paused
A creditor who has filed a lawsuit or is threatening to file one against you, must pause in taking legal action while you are under bankruptcy. Your creditors will have to handle your outstanding debts through the bankruptcy process, versus suing you directly.
You Have a Chance To Rebuild
Despite your credit score taking a hit and having a mark on your credit report for many years, you will have the chance to rebuild yourself financially. By the time bankruptcy is complete, you will probably have had at least some of your debts discharged, and can hopefully manage your money much easier than before.
There are many benefits to filing for bankruptcy, but it isn’t for everyone. That is why it is encouraged that you get a consultation from a bankruptcy lawyer before making any final decisions.
