Nowadays, there is a stigma attached to filing for bankruptcy as it is seen as a failing, which shouldn’t be so. Contrary to popular opinion, bankruptcy doesn’t always have to be a bad thing as it can be a good decision for a number of reasons. It is also important to remember that no two bankruptcy cases are the same and people file for bankruptcy for varying reasons. Some people file for bankruptcy because of unforeseen circumstances like unexpected medical bills or divorce. In cases like this, it is a good thing as filing for bankruptcy gives you the opportunity to regroup and start over. It is better to file for bankruptcy than to allow collections, foreclosures, and repossessions to push your scores down. In this article, we will be taking a look at some of the reasons why filing for bankruptcy can be a good thing.
Your Credit Score Will Improve
According to this Equifax credit bureau report, some of their customers credit scores rose progressively after filing for bankruptcy. A common misconception on bankruptcy is that it destroys your credit score and that is far from the truth. Filing for bankruptcy helps with improving your credit score as well as your general finances in the long term. However, Chapter 7 bankruptcy will appear on your public record for 10 years after you file so it might not be that great for your credit score in the short term.
Bankruptcy can be described as bad if you have the intention of defrauding the system – i.e. if you can afford to pay your debt off but you file for bankruptcy instead. As stated earlier, filing for bankruptcy will do more good to your credit score than repossessions and debts.
Collection Attempts Are Halted
Improvement of credit score isn’t the only benefit of filing for bankruptcy, another is the end of all of the harassment from bill collectors. Once you file for bankruptcy, all collection efforts like wage garnishment, agency phone calls, and lawsuits are halted. This is a huge relief for a lot of people who are seriously behind on their debt and have no idea on the right step to take.
Did you know that a variety of your debts can be wiped out with filing for Chapter 7 bankruptcy? Some of the debts include medical bills, credit card debt, past-due rent, business debts, personal loans, civil judgments, and some older tax debts. However, there are some debts that can’t be erased in bankruptcy like new tax debt and child support. Exemptions during bankruptcy can help you save some essential assets like your vehicle or home while discharging heavy debts.
To Wrap It Up
Bankruptcy shouldn’t be considered a bad thing as it is a good option for people who are in serious debt. There are however people who file for bankruptcy as a way to hide their assets and cheat the system. Even though these cases of bad bankruptcy are in the minority, they have overshadowed the good filing for bankruptcy has done.
If you are behind on payments and cannot find a way out, you need help. Dsouza and Strachan Legal Group has the knowledge and experience to help you navigate and eliminate your debt. Contact Dsouza and Strachan today for a free consultation.