“Bankruptcy” can be an intimidating word. You don’t want to think about going through it and you probably don’t want to file unless you absolutely have to. While it is a very big decision that requires time to consider and weigh options, there are actually quite a few advantages to filing for bankruptcy.
Some of your biggest concerns regarding bankruptcy are probably credit score, loss of assets like property, your ability to borrow money in the future, and the emotional difficulty of admitting that you need to file. These are valid concerns, but knowing the benefits of filing may actually ease some of these worries and help you think about whether filing is a good option for your situation.
1. You can erase most of your debt and some tax liabilities.
Financial hardship is a heavy burden to bear, and being in debt is likely the main reason you’re looking into bankruptcy in the first place. One of the biggest benefits and reasons to file bankruptcy is to eliminate that debt.
Filing for bankruptcy eliminates a large portion of your debt, and it can also eliminate some of your tax liabilities as well. This not only helps you start fresh with improving your financial situation, but it also relieves a lot of the emotional stress of dealing with debt and living from paycheck to paycheck.
2. Bankruptcy may make it easier to borrow money in the future.
You may be worried that filing for bankruptcy will destroy your credit and your chances of borrowing money in the future. Although you will have to rebuild your credit score, bankruptcy looks better to a lender than missed payments, lawsuits, etc. from your current situation, which are also damaging your credit score.
3. Filing now means you can start rebuilding now.
While it’s tempting to avoid bankruptcy until the last moment when you have no other options, it can be wise to consider filing before it gets to that point. If bankruptcy is the best option for your situation, considering it now means you can start rebuilding your credit score now and get back on your feet more quickly.
4. Filing for bankruptcy can protect your property and your car.
Contrary to the belief that you will “lose everything” in bankruptcy, many possessions are actually protected from being liquidated when you file. In many cases, bankruptcy can actually stop a foreclosure on your house and allow you to keep your car. You can often keep a large majority of your possessions, so don’t assume that you will have to give up everything if you file for bankruptcy.
5. You’ll stop getting calls all the time about your credit.
If you are facing debt right now, you are probably plagued day in and day out by calls about your credit. When you file for bankruptcy, creditors may no longer harass you. This will erase the stress and emotional tension of receiving these calls. Then you can focus all your energy on rebuilding and improving your situation.
6. Bankruptcy is not a failure; it’s a new start and a wise decision.
When facing the possibility of bankruptcy, many people are ashamed because they believe they’ve failed and must “admit defeat.” In reality, filing for bankruptcy after assessing and weighing your options shows that you are making an informed decision and taking control of your situation. It’s a chance for a new start.
If you’re facing severe financial hardship and are considering bankruptcy, you can ask a local attorney what the best option is for you.