Bankruptcy affords you a financial safety net when your bills become uncontrollable from unforeseen circumstances like divorce, illness, or unemployment. Bankruptcy can offer a fresh financial start by discharge (wipe out) certain debts such as credit cards, past due utility bills, unsecured personal loans, health club memberships, and much more.
Many people choose to file a Chapter 7 bankruptcy because it typically discharges debts within four to six months and does not require filers to repay their creditors. An individual must pass the means test to qualify to file a Chapter 7; if not, they may file for a Chapter 13 Bankruptcy.
Although a debtor must commit to a three to five year repayment plan through Chapter 13, there are other benefits that Chapter 7 cannot offer, such as stopping a home foreclosure or vehicle repossession and reducing secured debt on your property. Either bankruptcy will stop harassing debt collectors and wage garnishments, and other types of collection actions.
A bankruptcy filing will undoubtedly affect your credit score, but you can improve your credit over time, typically sooner than most people expect. Many people find that bankruptcy helps repair their credit quicker than trying to catch up with their overwhelming debts.
While individuals file for bankruptcy to deal with consumer debt issues, bankruptcy may also benefit small business owners by helping their business become profitable again.
Ultimately, many do not want to file for bankruptcy. If you are in need of bankruptcy relief but have doubts, you are not alone. Not only have employers laid off large numbers of their employees because of the coronavirus outbreak, but many large and small companies have gone out of business. Luckily, a fresh financial start provided by a bankruptcy filing is a smart move that will help improve your mental and financial health as well as the overall economy.
- Why File For Bankruptcy?
- Oftentimes bankruptcy is the best way to get rid of some, if not all, of your debt and receive a fresh start.