5 Unforeseen Benefits of Filing for Bankruptcy
Many people have negative beliefs about bankruptcy. They think it means that that’ve failed, that it will ruin their credit, and that it paints a picture of them as financially irresponsible. But anyone who has actually gone through a bankruptcy knows that none of these things is true. Many people get into financial trouble because of a series of bad luck, and filing for bankruptcy is just a matter of taking advantage of a legal benefit that’s made available to everyone.
There are a lot of other myths out there that can prevent people who need bankruptcy from filing for it and getting the debt relief they need. It’s important that you know the truth – one of them being that bankruptcy actually has a lot of benefits. Here are five of the benefits of filing for bankruptcy you might not know:
Creditors Stop Calling
By the time you consider filing for bankruptcy, you are probably drowning in debt. Creditors are likely calling constantly, and you may even be afraid to answer your phone. You are constantly being harassed to pay bills, but you don’t have the money to satisfy the debts.
When you file for bankruptcy, an automatic stay goes into effect that legally prohibits creditors from contacting you. At the very least, you get the mental space to determine a plan for going forward.
Debt is Discharged
If you are able to qualify for Chapter 7 bankruptcy, you can get all of your unsecured debt discharged, such as credit cards, medical bills, and personal loans. You could have thousands of dollars in debt that goes away instantly. That could clear up hundreds of dollars each month that you could put toward other bills, such as your mortgage or car payment. That can help you save your important assets, and it can help you get your finances under control quickly.
You Learn Better Financial Management
Whether you file Chapter 7 and get all your unsecured debt discharged or you file Chapter 13 and get your debt on a refinanced, repayment plan, you won’t have access to credit cards. You won’t be able to use the credit cards you ad, and you won’t be able to open any new lines of credit. You will have to learn how to live within your means, with access only to the money currently in your account. That can help you learn how to better manage your money so that you don’t get into financial trouble again in the future.
You Get Credit Education
A requirement of declaring bankruptcy is that you must go through credit counseling courses. Even if you got into debt through no fault of your own – such as because of losing your job or becoming seriously ill – it will only benefit you to learn how to better manage your credit. But if you did get into trouble because of misuse of credit, this education will help you make better choices that will keep you out of trouble in the future. You’ll have more financial stability and be able to use credit for your benefit.
Credit is Improved
The biggest fear that most people have about filing for bankruptcy is that their credit will be ruined. While it’s true that you won’t be able to get new credit right after filing, you will find that your credit improves quickly. Most people can easily get approved for new credit within two years of their filing.
But you may be able to get credit even faster than that. Bankruptcy can clear up your finances so that you can get other accounts in better order, such as your student loan (which cannot be discharged) and your mortgage. You can start rebuilding your credit because you have the money to meet your responsibilities.
Don’t let misconceptions about bankruptcy keep you from taking advantage of the benefits it offers. Bankruptcy is a useful tool that can help you get relief from your debt and take back control of your finances. Talk to a bankruptcy lawyer about whether bankruptcy would be right for your circumstances.
My AZ Lawyers can help you if you are considering bankruptcy. Our experienced bankruptcy attorneys will help you understand the difference between Chapter 7 and Chapter 13 bankruptcy to know which might be better for you. If you decide to file for bankruptcy, one of our attorneys can file it for you to improve the chances of a successful discharge. Call our bankruptcy law office today to talk to a bankruptcy lawyer and learn about your debt relief options.
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