To declare bankruptcy can be scary. While it can be useful to resolve debts, most people worry about the damage it can do their credit score. Your credit score will take a hit if you file for bankruptcy, but you can always rebuild your credit.
Chapter 7 bankruptcy is also known as liquidation bankruptcy. People use it to clear away unsecured debts. If you are behind on your bills and cannot afford your living expenses on top of your debt, then you can use bankruptcy to discharge your debts and reset your finances. Here are three benefits of filing for bankruptcy.
Automatic Stay
After filing for bankruptcy, an automatic stay will stop lawsuits filed by creditors, government entities and collection agencies. Before declaring bankruptcy, a lot of people are at risk of losing their homes, of being found in contempt or losing their utilities, benefits and more. When you file for bankruptcy, all of this goes on hold. Creditors cannot call and harass you for payment. This gives you time to discharge your debts and to figure out the rest of your bills.
Discharged Debts
The biggest benefit of Chapter 7 bankruptcy is the discharged debts. Unlike Chapter 13, you do not have to pay back your debts at the end. While there are some debts that you cannot discharge, most debts are included in bankruptcy. For instance, you can add unsecured credit cards, loans, medical bills and more. There are some debts, however, that you cannot discharge. These debts include student loans, support orders and tax debts.
Finance Education
Most debtors that declare personal bankruptcy must take credit counseling. While this might sound like a disadvantage at first, it can help prepare you for life after bankruptcy. With the new education, you can rebuild your credit and learn better financial habits so that you don’t end up in the same situation later. Most people can rebuild their credit within a couple of years. Even though bankruptcy remains on your credit report for 10 years, you can get your financial health back quickly.When you have a lawyer to advocate for you, bankruptcy doesn’t have to be overwhelming or scary. If you’re considering bankruptcy because you can’t afford your living costs, then this can be a good way to reset your finances. For most people who consider bankruptcy, the advantages outweigh the disadvantages. To find out if bankruptcy is right for you, set up a consultation with a bankruptcy lawyer in Manchester, CT, like from Chorches Bankruptcy Law, as soon as possible.