If you are in debt and are considering bankruptcy, there are five clear benefits that you can realize from filing for bankruptcy. Bankruptcy can be a great solution for several reasons. Learn more about the benefits of filing for bankruptcy to get rid of debt.
Why Do People File Bankruptcy?
According to information obtained from, the US Bankruptcy Court statistics, one of the biggest reasons that people file bankruptcy is because of medical bills. Another leading reason that people wind up filing for bankruptcy is that they lose their jobs. On average, according to the Department of Labor, people that are looking for a job spend about 11 hours a week looking for a job.
Most people do not take on debt that they have no intention of paying. There is usually an event that pushes them into bankruptcy. Unexpected situations crop up all the time and can change your financial picture quickly.
Bankruptcy Process
Bankruptcy does come with a lot of benefits, but it is a process. You will need to provide a complete list of creditors to your attorney. You will also have to attend meetings or mediation sessions to sit down with creditors. You want to be fully prepared for your mediation. Have all the documentation with you, and your payment history to ensure that your lawyer can negotiate on your behalf.
1. The Benefit of The Automatic Stay
One of the biggest benefits of filing for bankruptcy is the “automatic stay”. The automatic stay goes into effect as soon as you file for bankruptcy. The automatic stay prevents collections, phone calls, foreclosure actions, and repossessions by your creditors.
Once the bankruptcy is filed, creditors are barred from contacting you and they are barred from reclaiming their property through foreclosure or repossession. The automatic stay can stop foreclosure proceedings right in their tracks. It can also keep the repo many away who is trying to take your car.
2. Stress Relief Is a Big Benefit
If you are like most people that find themselves in debt with no way out, you will likely face a lot of calls from debt collectors. They likely call, text, call your job, send letters, and more to pressure you into making payments. You also may be dealing with a repo company looking for your car, or the threat of losing your family home. It is an extremely stressful situation.
Bankruptcy stops stress. Bankruptcy helps you to take a deep breath and get out from under suffocating debt and the fear you feel every time the phone rings. Learn more about the benefits of bankruptcy from an attorney today.
3. You Will Get a Fresh Financial Start
There are two different chapters of bankruptcy that are used to discharge consumer debt. Chapter 11 and a Chapter 7. The Chapter 11 option is often referred to as “reorganization bankruptcy”. It is a plan that helps you to pay off your debt over a specific period of time with less interest. In Chapter 11, you get to keep all of your goods. Unsecured debt is discharged, and secured debt is reorganized to help you pay it off.
In a Chapter 7 bankruptcy filing, everything but exempt assets will be sold to raise money to pay your debt. However, once you are discharged you will carry no debt. In a Chapter 11 case, the plan may take three to five years to pay off the debt.
An attorney can help you to decide which chapter is the right chapter for your situation. In both cases, once you complete the process, you will have a fresh financial start.
4. You Can Start Rebuilding Your Credit
Bankruptcy, contrary to popular belief, does not mean you will never get credit again. As a matter of fact, many creditors are out there willing to work with people that have filed for bankruptcy. You can start rebuilding your credit immediately.
5. Being Proactive About Your Finances Is Respected
When you realize you are in trouble financially, it is always best to be proactive. Filing for bankruptcy is not avoiding your debt, it is taking responsibility for your debt. You will feel better about yourself and creditors will see you in a different light. Speak to an attorney about the benefits of bankruptcy today.
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