Sometimes it’s difficult or impossible to avoid a personal or business financial crisis. In some cases, your last resort for relief may come from filing for bankruptcy.
Are you unable to meet your financial obligations that you risk wage garnishment? Are you receiving harassing calls from creditors or facing lawsuits for unpaid debts?
If so, you might want to consider declaring bankruptcy.
Well, here are the bankruptcy advantages:
1. Trigger the automatic stay provision
The provision temporarily halts actions by the aggressive creditors, collection agencies, and government agencies to recover the money you owe them in debt.
Once you’ve been granted an automatic stay, the creditor won’t call you again, send any letters, file a lawsuit against you, or repossess properties you put up as collateral.
A bankruptcy order can also prevent foreclosures, evictions, and wage garnishments.
However, certain exceptions may apply.
2. It is possible to wipe out some debt obligations
If a court gives you a bankruptcy discharge, it relieves you of the responsibility to repay some of your dischargeable debts. In other words, the debts get eliminated for good.
The dischargeable debts you’re most likely to benefit from include:
- Medical bills
- Credit card debt
- Utility bills
- Personal loans from friends, colleagues, family members, etc.
3. Credit score benefits
Bankruptcy records can stay on your credit history for up to 10 years. But think about the negative impact defaults, missed payments, lawsuits, and repossessions will have on your credit.
Declaring yourself bankrupt can help improve your credit rating, especially after the dischargeable debts have been wiped out.
4. Gives you a chance for a fresh start
While filing for bankruptcy won’t clear your debt burden, you will have time to put things in order and rise again.
It is mentally freeing, and you can seek financial counseling to come up with a practical strategy to repay and balance your debts.
Declaring bankruptcy is not for everyone, though. It is best to consult with an experienced bankruptcy trustee or lawyer to evaluate your case’s unique financial circumstances. That way, they can advise you on the best course of action.