What are the Benefits of Filing for bankruptcy?
There are times when filing for bankruptcy offers the most advantageous results and is the right course of action. While it’s never an easy decision, filing for bankruptcy can help you find firmer financial ground and safeguard your future. In this article, we’ll take a look at some of the biggest benefits of filing for bankruptcy.
Freedom from Creditor Contact and Harassment
One of the greatest advantages to filing for bankruptcy is what’s called the automatic stay. The automatic stay is an injunction which prevents creditors from collecting debts from, and suing individuals, who have declared bankruptcy. It also extends to contact in general, which means once the automatic stay goes into place, creditors will not be able to legally call you or send you letters. As soon as the bankruptcy petition is filed, the stay goes into effect, subject to some exceptions for, among other reasons, multiple bankruptcy filings.
If you’re dealing with harassment from creditors, this is one huge advantage to filing for bankruptcy. With the automatic stay in place, you’ll have the peace of mind you need to think through your financial situation carefully and get back on track.
A Chance to Rebuild Your Credit Score
Missed payments, late fees, and defaults can do a number on your credit score. As you get further into debt, it becomes harder to keep up with payments, which only does more damage to your credit score.
A low credit score will turn off most lenders and leave you with limited options when you need to take out a loan. While it’s true your credit score won’t bounce back immediately after filing for bankruptcy, it does offer you a chance to rebuild your credit score. It’s much easier to show a past bankruptcy filing to a lender than it is to try to explain ongoing missed payments and lawsuits.
Keep in mind that many of your debts may be discharged after the bankruptcy process ends. This will give you a chance to improve your credit score in a sustainable fashion.
Avoid Foreclosure
One of the biggest fears of people considering filing for bankruptcy is the idea of losing their home. No one wants to lose the roof over their head and have to start over on what they have worked so hard to build.
Bankruptcy can help you prevent foreclosure on your home. In many cases, your home may be deemed exempt especially if it does not have any non-exempt equity. We can walk you through the process of determining non-exempt equity and deciding how to best protect your home from liquidation.
Protect Your Future Income
In the case of Chapter 7 Bankruptcy, you can protect your future wages from garnishment. The courts will be focused on your income before filing; the income you make after filing will not be factored into the bankruptcy estate in most cases.
There are a few key things to remember when filing for bankruptcy. First, most tax-related debt and student loan cannot be discharged. However, because you will likely be able to discharge many of your debts, it will be easier to make payments on any owed taxes or student loans.
If you’re considering filing for bankruptcy, contact us today. We’ll discuss the specifics of your case with you and determine the best way to proceed.