If you’re thinking about filing for bankruptcy, you may – very understandably – be wondering if the benefits of this opportunity outweigh the drawbacks. After all, taking any kind of legal action can be stressful and filing for bankruptcy will temporarily damage your credit score.
If you’re struggling with a single overdue account, filing for bankruptcy is probably not the best option for your circumstances. However, if you’re struggling to repay multiple accounts, the benefits of this process may very well outweigh its potential drawbacks. Here are a few of the primary reasons why individuals and married couples choose to file for personal bankruptcy.
The automatic stay can halt collections
When a bankruptcy case is filed, a legal protection known as the automatic stay goes into effect. This legal switch halts most creditors from engaging in any collection actions and direct appeals to the filer to pay off their debt until the case is resolved. This protection can be especially beneficial for those who are facing wage garnishment, a risk of repossession or foreclosure, creditor harassment and collection-related lawsuits.
Regaining a strong financial footing
Once a bankruptcy case has been concluded successfully, a filer will benefit from having their eligible debts discharged outright (via Chapter 7 bankruptcy) or after they’ve repaid some of their balance (via Chapter 13 bankruptcy). In either event, experiencing this kind of debt relief can be life-changing for many families.
Filing for bankruptcy is not the best debt relief or debt management strategy for all circumstances. With that said, there are many good reasons why, each and every year, hundreds of thousands of Americans choose to take advantage of this opportunity.
By learning about the bankruptcy process and taking care to assess whether filing for this specific form of debt relief could be the best option for your situation, you’ll be able to make informed choices about your next steps. Whether you opt to file for bankruptcy or to explore bankruptcy alternatives, it is important to understand that there are opportunities available to you that can help you to regain strong financial footing sooner rather than later.