Many people think that bankruptcy means failure. They think that filing for bankruptcy is something to be avoided at all costs, even though it is a safety net that was put in place to help people get out of debt. This misconception keeps people from taking advantage of the benefits of bankruptcy, which is why we wanted to take some time to discuss the advantage of bankruptcy.
Here are three reasons bankruptcy isn’t the end of the world.
It Can Raise Your Credit Score
It’s common to hear that bankruptcy will wreak havoc on your credit score if you decide to file. But consider this—many people who file for bankruptcy already have poor credit scores because they’ve been struggling with debt for so long. According to Nerdwallet, scores can actually rise pretty fast after bankruptcy.
“Within a year, you’re way better off,” Jaromir Nosal, an economics professor at Boston College, said to Nerdwallet in 2016. “It’s a pretty rapid rate of recovery.”
It Can Stop Harassing Collection Calls
After filing for bankruptcy, you can even see an end to collection calls. As anyone who has fallen behind on loan payments, these calls can feel like harassment. Filing can grant you an “automatic stay” on your debt payments, which means that all collection efforts—including lawsuits and wage garnishment—must cease until the process is complete.
It Can Erase Certain Debts
If you file for Chapter 7 bankruptcy, you can even see some of your outstanding debts completely disappear. The types of debt that can be discharged include the following:
- Medical bills
- Credit card debt
- Utility bills
- Business debts
- Some tax debts
- Personal loans
- Civil judgments
Even if you can’t get rid of the majority of your debts by filing for bankruptcy, discharging even a few can give you the room to breathe that you need in order to get on top of your payments.
When to Consider Filing
For many people, paying back what you owe is a point of pride—but it’s not always possible. By the time you realize that you need to consider bankruptcy, the situation has progressed past that end. Continuing to make payments that will never be enough to pay off the balance will only further your debt load and endanger your financial future.
If you have any of the types of debt listed above and they equal more than half of what you make in a year, it’s probably time to consider this financial move.
Once you realize that it is your best option, it’s time to hire a bankruptcy attorney. It is possible to file by yourself, but even a small mistake in the complex paperwork that you need to file can lead to your case being dismissed. It’s best to leave that work to the professionals.
Talk to us about filing for bankruptcy, and get some relief!
If you are considering taking the next step, get in touch with the attorneys at AM Law in Miami today.