The Benefits of Bankruptcy We Don’t Talk About: What You Need to Know

The Benefits of Bankruptcy

People and businesses with financial problems that affect their ability to pay their debts can turn to bankruptcy to solve their economic deadlock. This legal tool gives Americans the opportunity to find debt relief to restart their fiscal lives with a new beginning. 

While many people consider bankruptcy a poor choice, it offers several benefits for those who take it as an opportunity rather than a death sentence. Before entering into a bankruptcy agreement, it’s a good idea to contact a trusted bankruptcy lawyer like wh Law

Bankruptcy gives families and businesses a new start

No one goes into bankruptcy by choice. Individuals usually need to file for bankruptcy because their financial situation is no longer sustainable. Bankruptcy also isn’t a permanent situation. 

After a few years, the process ends, and people can start their financial lives with a relatively clean slate. While the bankruptcy information stays on their credit report for a few years, it does eventually go away, which is when the fresh start truly begins. 

Bankruptcy ends the anxiety of financial debt

Another benefit of filing bankruptcy is ending the crippling anxiety of living with overwhelming financial debt. Creditors will call every night when people owe money and cannot make their payments. The calls are humiliating and continuous until debtors file for bankruptcy or pay off their debts. 

Once people file for bankruptcy, creditors must stop calling. Creditors have to stop collection attempts during bankruptcy and after the file is closed. The filing also puts a stay on wage garnishments, evictions, and potential utility shutoffs. Many people who file for bankruptcy can discharge many of their debts, lifting a significant weight from their shoulders. 

Most people can keep their cars during bankruptcy 

People who file for bankruptcy or debt relief can keep their cars in most situations. Filers have to continue paying down a car note if they have one, but some bankruptcy cases include loan restructuring with low car payments. 

Foreclosure procedures stop when filing for bankruptcy 

If your home is in foreclosure, filing for bankruptcy stops the process. During bankruptcy filings, you might be able to restructure your mortgage payments. Your bankruptcy agreement will include your monthly payments for your car and home, letting your family maintain some of the status quo. Your attorney will work to help you keep your home.  

Because bankruptcy courts want you to keep as much as you can, they will help by creating a plan that sets your mortgage payments at an affordable monthly price that fits your budget. 

Credit scores improve at the end of the bankruptcy

Once you file for bankruptcy, your debt-to-income ratio changes, thus improving your credit score. As soon as your bankruptcy has ended, the record remains for a few years, but your credit score immediately improves.  

Wrap up

Filing for bankruptcy is nothing to be ashamed of, as many people benefit from the legal tool. It’s crucial to work with a knowledgeable and experienced bankruptcy attorney to get the most benefits out of filing for bankruptcy and can help you keep your car, home, and dignity.