Filing Bankruptcy: Pros and Cons
Bankruptcy could be the solution that you need to get your financial life back on track and in control. Here are some key ways in which bankruptcy can be beneficial:
1. Eliminating Credit Card Debt
At first, credit card debt can seem like a minor blip, until it begins to build with changing interest rates, hidden fees, and billing procedures that make your credit card debts collect into a massive unmanageable heap. Bankruptcy can eliminate that mass.
2. Erasing Medical Bills
As medical debts are a form of unsecured debt, they can be resolved through Chapter 7 bankruptcy, or converted into manageable payments through Chapter 13 bankruptcy.
3. Ending Wage Garnishments
Some creditors use wage garnishment as a tool to collect your debt, as it gives them the power to take your wages before you even receive them. In some states, bankruptcy can stop this with the court order titled the Automatic Stay.
4. Ending Foreclosure
The Automatic Stay can also provide you with quick protection from foreclosure. If you file for bankruptcy, you may be able to pay your mortgage more easily, as well as, through a traditional Chapter 13 bankruptcy, have the chance to repay past-due mortgages over time. Filing a bankruptcy will stop the foreclosure in its tracks. Debtors have even provided evidence of bankruptcy filing at the Sheriff’s Sale to stop the foreclosure. However, this approach is not recommended as bankruptcy requires thought and planning. There are different approaches in different jurisdictions where you can try to save your home through a Chapter 13 bankruptcy. Note: there are no real options to save your home from foreclosure under Chapter 7. The Chapter 13 repayment plan is the best approach if saving your home is the main goal.
5. End Car Repossession
Bankruptcy may also be able to end car repossession along with other efforts to collect your debts. Using a Chapter 13 bankruptcy, you may be able to catch up on car payments or restructure and possibly cram-down the loan to the value of the car. You may also be able to use a single payment to eliminate debts through a Chapter 7 bankruptcy.
6. Silencing Creditors
Filing bankruptcy can give you the protection from creditor harassment that you need. This protection can include the Automatic Stay, which can prevent your creditors from contacting you in any form while your case is pending.
7. A Fresh Start
When you are discharged from your bankruptcy, you have gained a fresh financial start. Bankruptcy may be the solution that you need in order to move on and rebuild your financial life, without the burden of debts or financial concerns weighing you down.
Bankruptcy may be the solution to all of your financial and debt concerns, as it can improve your financial state immensely. However, some of these benefits, such as ending wage garnishments, car repossession, foreclosure, and silencing creditors, are dependent on your own state bankruptcy laws.