How can bankruptcy help you?

The idea of bankruptcy intimidates many people. The average person thinks that bankruptcy is complicated and carries major social stigma. In reality, pursuing bankruptcy with the right help can be a straightforward process.

More importantly, while a filing is part of the public record and requires newspaper publication, few people will have any reason to know that you filed. Unless you tell someone or they have a reason to pull your credit report, they may never know that you went through a difficult financial time that necessitated the bankruptcy filing.

When you realize that the risks of bankruptcy are often exaggerated, you may feel more curious about the benefits it offers. How could filing for bankruptcy potentially help you?

It immediately stops collection activity

Did you just get a letter from the hospital where you underwent chemotherapy advising you that they will file a collection lawsuit against you? Are you worried your mortgage lender might foreclose? Have collection phone calls started to affect your stress level and mental health?

Someone in any of these circumstances will definitely benefit from an automatic stay. As soon as you file for bankruptcy, the courts issue a stay that prevents anyone from trying to collect on a debt until they resolve the filing. An automatic stay is not absolute, but it is immediate and gives you time to think about your next step.

It can discharge some of your debt

Unsecured debts may be eligible for discharge in a bankruptcy. For some people, medical debt will be why they consider bankruptcy. Others may have too much credit card debt to ever pay it all off.

A successful bankruptcy filing will culminate in the discharge of the remaining balance on unsecured debts like credit cards. Although the money doesn’t disappear, you no longer have an obligation to repay it and cannot face any more collection activity over those specific debts. A discharge not only helps you wipe the slate clean but will also make it easier to rework your budget and cover basic expenses without going back into debt.

Identifying the benefits of bankruptcy can help you decide if it is time for you to file.