Declaring bankruptcy allows those in financial distress to get a fresh start. Filing for bankruptcy may come with a handful of drawbacks, but it also comes with many advantages that can assist in handling a magnitude of debt. While it is challenging to rebuild your credit, bankruptcy helps you to save your future credit opportunities and stabilize your current financial situation.
Keep reading to learn more about the pros of declaring bankruptcy.
An automatic stay is an injection that protects those in debt from creditors and collection agencies. The automatic stay begins as soon as a bankruptcy petition is filed and varies in length based on several factors. It is unlikely that creditors will receive the entire amount owed by debtors when an automatic stay is placed. Creditors are unable to contact you, sue you, send you letters, repossess property, and more when an automatic stay is in place. Automatic stays may prevent evictions, foreclosures, garnishing wages, and utility cut-offs.
When you file for bankruptcy, you may be able to discharge your debts or at least some of them. This means some of your debt can be cleared away, and you are no longer obligated to repay what you owe. On top of that, your creditors are no longer allowed to come after you for collection. Some debts that may be discharged can include credit card debt, medical bills, personal loans, and more.
Bankruptcy exemptions will allow you to go through the bankruptcy process without losing some property. For example, in California, bankruptcy exemptions protect some equity in your home and car. Additionally, bankruptcy exemptions will help determine how much you will repay your creditors in Chapter 13 bankruptcy.
You might be able to begin improving your credit as soon as you file for bankruptcy. Because many of your debts are discharged when you file for bankruptcy, you will have the opportunity to start rebuilding your credit score almost immediately. Even though a bankruptcy filing can stay on your credit report for 7-10 years, you can begin making on-time payments on non-discharged debts.
Learn From Past Mistakes
In addition to a fresh start, filing for bankruptcy will be a good lesson learned. When you declare bankruptcy, you must take a credit counseling course that will give you the tools and knowledge to rebuild your credit and learn better financial habits. Additionally, you will learn to live within your means since you will not have credit cards. In turn, this can help prevent future financial disasters.
Contact The Law Offices of Charles W. Daff
Filing for bankruptcy might be one of your best options if you are facing financial distress as it offers many advantages to an otherwise difficult situation. However, you may not be familiar with the bankruptcy process and will want help getting through this overwhelming time. If you are in the Santa Ana, California area and are considering filing for bankruptcy, call The Law Offices of Charles W. Daff to discuss your case with a knowledgeable and experienced attorney today.