Bankruptcy is a legal procedure for when individuals cannot pay their debts and seek relief from them while enabling creditors to receive some part of the payment owed. There are several types of bankruptcy filings in the United States, Chapter 7 and Chapter 13 being the most common.
The legal proceedings can be complex, and if you want to file bankruptcy for debt relief, it is recommended to consult a qualified debt relief lawyer. They can help you understand whether this is the best choice for your financial future and provide you with legal guidance throughout the procedure.
What are the advantages of filing for bankruptcy?
Automatic stay.
When you file for bankruptcy, most actions against you, the debtor, such as foreclosures, repossession of property, wage garnishment, debt lawsuits, and collection agency calls, are temporarily stopped because of the grant of the automatic stay. It lasts as long as the bankruptcy case is in progress.
Erasure of certain debts.
In Chapter 7 bankruptcy, you are freed from debts such as credit card debt, your personal liability on secured debts, personal loans and other unsecured debts, unpaid utilities, and some older tax debts. Although some debts such as alimony, child support, court fees, and recent tax debts cannot be discharged, the forgiven debts can help reduce the amount you have to pay back.
Improved credit.
Initially, your credit score is heavily impacted by filing for bankruptcy; however, it can be beneficial for your credit score over time. It can reduce your debt to credit ratio that can help boost your overall credit score. Taking steps such as resolving past errors in your credit report, timely payment of your bills, using credit cards practically, and increasing their credit limits after your bankruptcy can help you build a good credit score.
Relieves your stress.
The accumulation of debts and interests can lead to financial distress. You may experience psychological and physical impacts of excessive stress such as anxiety, depression, and headaches because of your debt-related difficulties. Despite the social stigma regarding filing for bankruptcy, it may be the best solution for resolving your financial problems and managing your stress.
Allows you to have a fresh start.
Bankruptcy allows you to start without the overwhelming debt from previous choices burdening you. While some people may feel a sense of shame or low self-worth because they filed for bankruptcy, it is essential to realize that it was the best decision for protecting your financial future. Learning from past mistakes and implementing better decisions can help you become financially independent.
The expertise of a debt relief lawyer can help you navigate through the legal complications in the process of filing for bankruptcy. Their knowledge, resources, and experience are valuable for your case.
Written by Spencer Calvert
