Benefits of Filing Bankruptcy
During these hard financial times, many people often consider the option of declaring bankruptcy so as to find relief from their debt. Nevertheless, many financial advisors often tend to overlook the many advantages of filing bankruptcy as they emphasize on the drawbacks, such as lower credit rating as well as credit scores.
1. Restructuring
Filing bankruptcy will give you the opportunity to settle you debt over the period approved by the court. In many cases, courts give debtors a period of 5 years to settle the debt in monthly payments that are supposed to be paid to a court trustee. If the period of loan payment is overdue, car loan payments might be included to prevent repossession action. On the other hand, trustees can negotiate payment plans or payment reduction in order to settle the previous balance.
2. Credit discharge
Unsecure balance such as medical bills, personal loans and credit card balances might be cleared by filing bankruptcy. This relieves you of the debt you may have while removing any information linked with charge-offs. Having your debt completely discharged can give you a fresh start so that you can have a chance to improve your credit rating. Debt discharge has proven beneficial to those who are unemployed and are unable to pay their loan on time.
3. Protection from creditors
After filing a bankruptcy petition, all creditors are supposed to cease their collection activities immediately. This includes common activities such as demand letters, foreclosures, repossessions and credit telephone calls. If creditors contact you after filing bankruptcy, inform your attorney immediately so that they face legal action.
4. Liquidation
Of course, this is the ultimate benefit of filing bankruptcy since you are not required to liquidate your assets to pay the debt. Filing bankruptcy with therefore protect your assets from repossessions.
Filing bankruptcy is a good option if you want a fresh start but indeed it has plenty of disadvantages. For starters, it will affect your credit rating which means you may not be eligible to apply for another loan.
