If it seems like you are in a mountain of debt, and there is no way that you can pay it off, it may be time to consider getting a fresh start through bankruptcy. However, doing so is an enormous decision that can impact your life in ways both positive and negative, and it is important to remember that the effects of doing so are far-reaching. If you are undecided as to what the right financial decision is at this point in your life, it is a good idea to be aware of the information provided below.
#1—You Can Get Extra Time to Pay Off Any Debts That Cannot Be Discharged Through the Bankruptcy
One common concern that many debtors have when considering bankruptcy is that some debts are not typically able to be included in the proceedings. For example, if you owe child or spousal support or if you have any federally guaranteed student loans, you can almost never include them with your other debts.
However, you may find that by declaring bankruptcy, you are able to get additional time to pay off the debts you will still carry.
#2—Your Credit Score May Improve Faster Than You Thought
One misconception about declaring bankruptcy is that your credit will be ruined for 7–10 years after the filing. While the bankruptcy may remain on your credit report for that amount of time, its presence does not mean your credit history is impaired for that full amount of time. In fact, you will find that within a year or two after your bankruptcy was discharged, you may be eligible for new loans or credit cards.
However, you should use the bankruptcy to your best advantage and make sound financial decisions in the years after. By doing so, you can gradually rebuild your credit score.
#3—You Do Not Need to Have a Certain Amount of Debt to Qualify
A third benefit to consider is that you do not need to have a minimum amount of debt in order to be able to declare bankruptcy. Since what seems to you like an overwhelming amount of debt may not seem as significant to the next person, you and your bankruptcy lawyer are the persons best able to decide when it is time to get a fresh start.
Whether you lost your job and bills overwhelmed you or your insurance company didn't pay enough of some big hospital bills, you can declare bankruptcy to make the creditors quit harassing you, even if the amount of money in question is not a huge amount to other people.
In conclusion, bankruptcy has provided a fresh start for many people who have found themselves overwhelmed by debt. If you are considering bankruptcy, it will be helpful to be aware of the benefits of doing so, as listed above.