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Bankruptcy is often considered the last resort when you cannot bear the relentless pressure of debts and have no way to clear them. Getting along with the idea of filing it can be tough because debtors often feel guilty and frustrated. Additionally, there is a fear of irreversible financial consequences. However, bankruptcy is more of a remedy for your faltering financial health rather than a failure that should make you ashamed. In the real sense, it gives you the opportunity to have a clean financial slate and start afresh. Here are some ways in which this decision can help you take your finances back on track.
After filing bankruptcy, an automatic stay gets implemented. Once this happens, you are protected from lawsuits, foreclosures, collection calls, wage garnishments and demand letters. Moreover, you even get a discharge of a majority of debts when your Chapter 7 ends. Creditors can no longer collect from the debts discharged in bankruptcy. Rather, you can recover penalties and damages from the creditors who try to coerce you with letters, demands, calls and lawsuits on discharged debts.
Heavy debts can force you to sell all your property or even give it up to your creditors. However, opting for liquidation bankruptcy, gives you the opportunity to retain your property. If you learn more about bankruptcy, you will be surprised to know that you can claim certain property as exempted from being sold or taken to clear your debts. Your lawyer can guide you in this context. The exempted assets include your home, personal or household goods, a motor vehicle and tools used in business or trade. Further, your retirement is also protected against claims of creditors.
It is easy to believe that bankruptcy would hurt your credit score beyond repair because after all, you are declaring that you would pay none of your debts. But effectively, a fresh start can actually give you a new beginning with your credit score if it is already plummeting because your debts are high and you are slipping behind on repayments. This applies for people who have current scores well below 700. Surely, a clean slate to rebuild credit score makes good news for any debtor!
A fresh start with your credit score helps when you think about handling new debts. And if you have been on the weaker side, you will probably be able to avail this benefit after bankruptcy. Apart from this, the fact that you have opted for a new beginning with this decision opens up more credit card offers for you as time passes because the discharge eliminates a majority of your unsecured debts. If you are committed to building a good record, you can consolidate your financial position and reputation sooner than you expect.
Surely, filing for bankruptcy makes sense if you have a big debt that you cannot clear and want to get a fresh start with your finances. If you are in that kind of trouble, you must do it sooner rather than later.
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