Anyone who’s ever considered bankruptcy can tell you how complex and emotionally draining the process is. It requires more effort and time than most people think, yet it may be the best option for serious debt problems. Most probably wouldn’t consider it if they felt they had other, better options. However, it’s not all bad. There are certain benefits of filing for bankruptcy. In this article, we’ll look at what those benefits are and help you understand them better.
Why File for Bankruptcy?
While there are ways to avoid bankruptcy, sometimes it ends up being your best and only option. In the United States, bankruptcy is one of the most powerful debt relief alternatives. It has aided countless people in escaping poverty and obtaining a fresh financial start. It allows you to start again by wiping your debts. However, bankruptcy is a personal choice, and you should carefully examine if it is the best option for you.
When discussing bankruptcy, most people tend to focus on the negative sides – the emotionally and physically draining process. However, filing for bankruptcy also has a lot of benefits. Some of them are:
Filing For Bankruptcy Stops Creditor Harassment
One of the most well-known advantages of filing for bankruptcy is that creditors are prohibited from contacting you. The automatic stay prevents creditors from collecting payment as soon as a petitioner files for bankruptcy. The court may fine them if they violate the automatic stay and contact you. Moreover, repossessions, evictions, and foreclosures all get put on hold for the time being.
Permanent Debt Relief
Most types of debt, including credit card debt, medical debt, and personal loans, are erased when you file for bankruptcy. When the bankruptcy court grants you a bankruptcy discharge, you no longer have to pay these types of unsecured debts. For example, when filing for Chapter 7 bankruptcy, debtors typically receive a discharge within 120 days. When filing for Chapter 13 bankruptcy, a discharge is awarded once the agreed-upon payment plan is finished.
You’ll Almost Certainly Get to Keep All Your Belongings
One of the things many people ask is: “Can I get rid of debt and keep my possessions?” The answer is most likely yes. More than 95 percent of those who file for some type of bankruptcy in the United States preserve their belongings. The law safeguards some assets, known as exempt assets, from creditors.
However, if you plan on moving to a smaller, more financially viable place, it might be a good idea to get rid of some of your belongings. Whether it’s selling expensive things or donating the stuff you don’t need, it’s a good idea to free up as much space as possible and get rid of the clutter. Other valuable online resources regarding moving and packing can be easily found at getmovedtoday.com alongside storage tips.
Bankruptcy is not a public process. If you decide to file for bankruptcy, nobody has to know. Your friends, relatives, coworkers, and others won’t have a way of finding out that you have filed for bankruptcy. This is because your financial data is kept in a semi-private manner. A bankruptcy filing is only revealed when applying for a new loan or credit card since it appears on the credit report.
A Fresh Start
When you obtain a debt discharge, your debt slate is wiped clean, and you get a chance to start over financially. You may start rebuilding your credit by applying for loans and credit cards. At first, interest rates on any credit account will be higher than usual. However, they can go down after some time and with a solid pay history as proof of your ability to be a responsible debtor.
While there are some great benefits of filing for bankruptcy, it wouldn’t be fair if we didn’t cover some of the disadvantages. For example, your bankruptcy filing may have an impact on your future finances since it will stay on your credit report for up to 10 years. Bankruptcy is a negative mark on your credit report, but many debtors who file already have a bad track record. If you need to file for bankruptcy again, you will have to wait for years until you can do it again.
Moreover, bankruptcy will not remove your student debt. It also won’t cover your child support, alimony, or fines. You will lose all your current credit cards and will have to sign up for new ones. If you decide to buy a new house with a mortgage, you may have to wait or take extra steps to get a mortgage. If you are in control of money or trust funds, declaring bankruptcy may impact your job. Furthermore, becoming a firm director when insolvent is prohibited in many companies.
Life After Bankruptcy
After you’ve filed for bankruptcy and started to rebuild your credit, you need to be extra careful and always check your balances. Moreover, you need to be sure you’re making sound financial investments and moves. For example, if you’ve recently filed for bankruptcy, it might not seem viable for you to continue living in the same big house you used to live in before. This is where downsizing comes in. You can find a smaller home for you and your family – there are numerous places where you can do this in Florida.
As we said, there are both negative sides and benefits of filing for bankruptcy. We only want to make sure you have all available info to make an informed decision. At the end of the day – the decision is on you. And it’s not a small decision either. This is something that can affect you in the long run. However, it also depends on how you go about it.
Freire & Gonzalez is an attorney’s office where the attorneys are involved with their clients from beginning to end. You, as the client, will not be passed off to secretaries or paralegals like at other bankruptcy law firms. The attorneys will meet with you, will return your phone calls, and will answer your questions. We provide services in English and Spanish.
Our lawyers will answer any bankruptcy question you might have during the free consultation. To request a free consultation, please contact us at 305-826-1774. Please browse through our website, read our bankruptcy FAQ and see if our firm can help you resolve your financial issues. Contact Us at our locations: