Although filing for bankruptcy gets listed on your credit report and remains for 7-10 years, it has various benefits as well. There are two main types of bankruptcy (Chapter 7 and Chapter 13) under which you can file personal bankruptcy. However, you will have to make sure that none of the other options with regards to debt relief may help you solve your debt issues. It is best to consult with a bankruptcy attorney to determine what the most appropriate option is for your financial situation.
Advantages of Bankruptcy
Here are some advantages to filing for bankruptcy:
- You can get a fresh financial start –Bankruptcy may seem dismal, but it enables you to discharge most of your debts. If you can manage to stay strong throughout the process and if you work hard to start all over again, in time you will be able to reestablish your credit.
- The Automatic Stay – When you file bankruptcy, automatic stay offers you protection from collectors. As a result, the following are prohibited:
- Collection phone calls and notices
- Creditor lawsuits
- Foreclosure proceedings
- Wage garnishments
- Save your home – While your bankruptcy is pending, the automatic stay will prohibit collection activities. Filing for Chapter 7 bankruptcy can delay a foreclosure for the duration of your bankruptcy case and you can save your home by filing for Chapter 13.
- Be free from debt – If you can successfully complete the Chapter 7 bankruptcy process, the court will order that your debts be discharged, allowing you to be free of your burdensome debt. These can include medical bills, credit card debts, personal loans, and so on. This means that these debts will get erased and thus none of the creditors can collect any of these debts after the completion of the bankruptcy process.
So, these are the various benefits of bankruptcy but you will have to decide with the help of a bankruptcy attorney if it is the best option for you and your finances. As for the credit, you will have to work over time to rebuild it, but you may find that it was all worth it in the end to get a fresh financial start.
This is a guest post by Andrew who writes for financial communities.