To many people, filing for personal bankruptcy has a negative connotation. They believe that bankruptcy means you are irresponsible with expenses and do not know how to manage your finances. In reality, many that file for personal bankruptcy are struggling with excessive amounts of debt. This debt can be from overwhelming medical bills, a significant loss of income from the loss of a spouse, or any number of other situations.
For individuals struggling with overwhelming debt, filing for personal bankruptcy could be a viable option that provides several benefits.
What are these benefits, though? How could filing for bankruptcy be a good thing?
For starters, bankruptcy provides debt relief and can put a stop to collections. It can also protect your assets and give you a fresh start on your finances. We will discuss the benefits of filing for personal bankruptcy in more detail below.
Debt Relief
Depending on your specific case, bankruptcy can provide relief from overwhelming debt by either reducing the amount owed or eliminating it completely. Creditors will have to accept whatever payment you can provide as determined by the court, which may be nothing at all in some cases.
Stops Collections
Filing for bankruptcy immediately stops collections from creditors, including wage garnishments and bank levies. You will also be provided a bankruptcy representative who will handle all correspondence with the creditors in your stead. This provides you with much needed breathing room to reorganize your finances.
Protect Assets
In some cases, individuals can keep their assets, such as their home or vehicle, by filing for bankruptcy. This is because certain assets are protected by exemption laws on the federal and state level. Even if the asset does not fall under the exemption, it may be that a certain amount of the debt is forgiven. If you owe less than the forgiven amount, you then owe nothing and your asset is protected.
Rebuilds Credit
While bankruptcy does have a negative impact on credit scores, individuals who file for bankruptcy have the opportunity to rebuild their credit over time. This is because the bankruptcy discharge eliminates debt and allows individuals to start fresh.
Gives a Fresh Start
Bankruptcy is not the be all, end all. It essentially wipes the slate clean and allows you to begin again. It gives you much needed breathing room and allows you to start fresh. Yes, it may be difficult to obtain loans in the beginning, but it will get easier with time.
Related Questions
When Should You Consider Filing for Bankruptcy?
Are you overwhelmed by extreme debt? Are you facing foreclosure or repossession? Do you not know how to get out of a financial hole? If the answer to any of these questions is yes, it may be time to seriously consider filing for personal bankruptcy.
If you are facing overwhelming debt, cannot make payments on your bills, debt collection activities have become a regular occurrence, and wage garnishments have begun, bankruptcy might be the right option to give you a fresh start.
What Are the Qualifications for Filing for Bankruptcy?
There are six types of bankruptcy, but personal bankruptcy typically falls under either Chapter 7 or Chapter 13. Each chapter has their own qualifications and it is important to read up on them and do your homework.
For a high-level overview though, to qualify for bankruptcy you must pass a means test that evaluates income and debts to show that you cannot pay creditors. You must also complete a credit counseling course and provide financial info to the court.
Each chapter has specific requirements, so again it is important to do your research and consult a bankruptcy professional.
Conclusion
Filing for personal bankruptcy can provide individuals with much needed relief from overwhelming debt, stop collections from creditors, protect assets, and provide a path to rebuilding credit. If you are struggling with debt and considering bankruptcy, seek out a qualified bankruptcy attorney who can help you determine if it is the right choice for your situation.
Hines Law can answer your questions and help you find a debt solution that works for you. Our bankruptcy firm in Massachusetts specializes in Chapter 7 and Chapter 13 for individuals that are overwhelmed with debt and are struggling to make ends meet. Our experience and compassion provide guidance and support through a stressful and challenging financial time. Speak with a bankruptcy attorney today about your options and start gaining control of your finances. Free consultations