A lot of people are afraid to file for bankruptcy because they fear what it will mean for their future. They think that bankruptcy will ruin their credit, that they won’t be able to buy a new home or car, or that they may even have problems getting a job. Many people also feel a sense of embarrassment or failure because they let their finances get out of control (even if the circumstances that led to their bankruptcy was no fault of their own).
But even if bankruptcy gets a bad rep, it actually has many more benefits than disadvantages. Bankruptcy is a legal tool for debt relief. It is a legal right afforded those that need it, and it is not something to feel shame about. Besides helping you discharge debt, filing for bankruptcy can have these many other untold benefits:
Improve Your Credit
The fear that many have about bankruptcy is that it will decimate their credit score. But the truth is that even though bankruptcy will be a mark on your credit record, it can actually improve your credit score overall.
Think about this: If you are so in debt that you are unable to pay what you owe, you are going to have a lot of late and missed payments on your credit report. You’re also likely to have a delinquency or two. Those marks will continue to bring down your credit score, month after month and year after year. By filing for bankruptcy, you clear those marks and have just the one. At the same time, you clear up money to pay your other bills and stay current, allowing you to slowly build up your credit again.
Stop Harassment from Creditors
As soon as you file for bankruptcy, a stay is issued that prevents your creditors from calling and harassing you about the money you owe. By the time you file for bankruptcy, you’ve probably been getting a lot of these calls, so it will be a huge relief to be free of the harassment. You can finally get peace of mind and feel good about answering your phone again.
Get Rid of Old Tax Debt
Not much will get the tax man off your back, including filing for bankruptcy. However, if you have a tax debt that’s older than three years, you can likely discharge it in a bankruptcy filing. That can be a huge sum since it has likely racked up a lot of interest and penalties in that time. If you meet the criteria, you can discharge that debt entirely.
You Get Relief to Pay Debts that Can’t be Discharged
Not all debts can be discharged in bankruptcy, unfortunately. Most notably, student loans cannot be discharged, except under the most severe hardship and with the right documentation. However, filing bankruptcy can provide relief for a lot of other debts. When the money you would have paid toward those debts is freed up, you can likely pay off your student loans or other non-dischargeable debt more easily. At a minimum, your creditors should be more accommodating to help you find the right repayment plan or other options so that you are not in default.
You Can Likely Keep Your Home
When you file for bankruptcy, your trustee will add up your debts, as well as your assets. Any assets you have may be sold or distributed to your creditors to satisfy your debts. As such, many people worry that they will lose their home, their car, or other major assets if they file for bankruptcy.
Depending on how much equity you have in these assets, you are likely able to keep your home and your vehicle if you file for bankruptcy. Your bankruptcy attorney can help you understand the guidelines that are used to determine what you can keep and whether your assets will be affected.
Don’t let misconceptions about bankruptcy keep you from getting the debt relief you need. There are many more advantages to filing for bankruptcy than there are disadvantages. Talk to a Gilbert bankruptcy lawyer about whether filing for Chapter 7 or Chapter 13 bankruptcy would be right for you.
Gilbert Bankruptcy Lawyers help both individuals and businesses file for the bankruptcy relief they need. Our attorneys offer a free consultation to help you learn how to be debt free. Our services are affordably priced so that you can move forward with taking back control of your finances as quickly as possible. Contact us today to learn about Chapter 7 and Chapter 13 bankruptcy and which might be right for you.
Gilbert Bankruptcy Lawyers