Going through a bankruptcy can be a stressful and time-consuming situation. We at The Weller Legal Group are here to help make the bankruptcy process easier and more efficient for you and your family. In this article we are going to discuss 10 benefits of going through the bankruptcy process.
No More Calls
When you file for a bankruptcy this will trigger what is known as an automatic stay. An automatic stay will prevent creditors from taking the necessary actions to collect their debts. This will also prevent creditors from calling you, suing you, and sending you those nasty letters. Being able to live your life without the harassment of your creditors could be a good reason to begin the bankruptcy process.
Credit May Increase
Something that many people do not realize is that filing for bankruptcy may actually improve your credit score. The reason that this is a possibility, is that during the bankruptcy process many debts can be discharged, which may possibly help increase your credit score. Something to keep in mind is that filing for a bankruptcy will remain on your record for about 7-10 years, but that doesn’t necessarily mean that your credit score will decrease after the bankruptcy. There are no guarantees, but if you are starting out with a low credit score, you may actually be surprised that your credit score may be higher after the bankruptcy process is finished.
Life Without Credit Cards
For a period of time after your bankruptcy is finished you may not have any active credit cards. This should not be looked at as a negative, but instead as a positive. Not having credit cards will help you keep track of your expenses and live within your means. When people have credit cards it is very easy to overspend because the money almost doesn’t even seem real. This overspending combined with ridiculously high interest rates is a recipe for disaster. Living life without credit cards may be one of the best things for you and your finances going into the future.
Learn New Financial Habits
Clients who are declaring personal bankruptcy are required to take credit counseling. During the credit counseling process, you will be taught on steps that you can take to help rebuild your credit and also learn some new financial habits. This education can really help you and may even save you from getting into overbearing debt in the future.
Clears Debts or Creates Repayment Plans
The majority of people who are filing for bankruptcy mainly file for two reasons, clearing debts or creating a new repayment plan. With both Chapter 7 and Chapter 13 Bankruptcies you are able to discharge certain debts. With Chapter 7 Bankruptcy the court will likely sell off some of your assets in order to pay off your debts but after the bankruptcy process is finished you will have a fresh new start. The Chapter 13 Bankruptcy process is a little different, you can also discharge certain debts but you may still have to make monthly payments to your creditors after the bankruptcy process is over, hopefully at a more manageable monthly rate.
State Exemptions
There is some good news when it comes to being able to keep some of your property when filing for a bankruptcy. For example, many states will allow the debtor to keep their vehicle while filing for bankruptcy. It is good that states have these exemptions in place to allow people to continue to work while they are going through a bankruptcy.
Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
While filing for bankruptcy it is important to understand some of the benefits from the two most popular types of bankruptcies. The most popular types of bankruptcies for individuals in American are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. We will discuss the benefits of the two types of bankruptcies below:
Benefits of Chapter 7 Bankruptcy
The process for filing a Chapter 7 Bankruptcy is relatively quick. The entire process may only take between 3 to 6 months to complete. Filing Chapter 7 Bankruptcy will also prevent lenders from taking aggressive collection actions against you to try and reclaim their money. There is a possibility that after you file for this type of bankruptcy you will not have to repay any unsecured debts after the process is over. The Chapter 7 Bankruptcy may only remain on your credit reports for a maximum of 10 years.
Benefits of Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is aimed more towards people who can pay back their debts but may need a lower monthly payment. There are some exemptions in place that will help you save your items, for example your car, so you that you will be able to continue making an income to support yourself. There are some unsecured debts that can be discharged during a Chapter 13 Bankruptcy. The Chapter 13 Bankruptcy may only remain on your credit report for a maximum of 7 years.
Bankruptcy can be Good
There are many things that can hurt your credit much more than a bankruptcy. For example, missed payments, repossessions, lawsuits, and defaults can be much more detrimental to your credit score. Try to let go of the stigma that surrounds the word bankruptcy. Going through a bankruptcy will probably be way better for you in the long term than missing your minimum credit card payments each and every month.
You Get A Fresh Start
Going through a bankruptcy shouldn’t seem like a terrible thing for you and your life. In reality it could be one of the best things for you going into the future. With some credit card interest rates being over 20% it can be nearly impossible to pay off your debts making only the minimum payments each month. Filing for bankruptcy has completely changed people’s lives for the better and could very well be the answer to a majority of your current financial problems.
Final Thoughts
We at The Weller Legal Group hope that the information provided to you in this article helped you understand some of the benefits of declaring bankruptcy. Going through a bankruptcy is not the end of the world and may even be a great start to a fresh new beginning. We at The Weller Legal Group have years of experience in helping our clients with bankruptcies and improving their credit scores. We have offices located throughout Florida, including, Clearwater, Port Richey, and Lakeland. If you have any other questions in regards to filing bankruptcies or working on improving your credit score feel free to give us a call today at 1-800-407-3328.
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