“Bankruptcy” sounds very ominous and most people do everything they can to avoid having to file for this kind of debt relief. In fact, many people are so afraid of what could happen if they file for bankruptcy that they don’t realize all the ways doing so can actually help them.
If you’ve been very focused on the negatives associated with bankruptcy, take a moment to consider these positives:
It temporarily halts foreclosure and repossessions
If you’re in the midst of a financial crisis and about to face either a foreclosure or repossession of your vehicle, filing for bankruptcy can – at least temporarily – halt everything in its tracks. Once you file, an automatic stay goes into effect that prohibits further collection action in most cases without the bankruptcy trustee’s consent.
In some cases, you may be able to work out an agreement that will let you keep your home or vehicle. In other cases, filing for bankruptcy can give you much-needed breathing room to regroup and make a plan.
It can stop wage garnishments and utility shut-offs
Again, when your finances have reached the breaking point, you could be subject to utility shut-offs and wage garnishments that make a bad situation worse. Filing for bankruptcy can halt those kinds of things in their tracks. In many cases, the debts associated with your utility accounts and the debt causing your wages to be garnished can be discharged.
It ends creditor harassment and can limit your stress
Having creditors stalk you day and night via phone calls, increasingly urgent overdue bill notices, text messages and more can add to your feelings of anxiety and stress – and creditors never believe anybody when they say there’s simply no money to be found. Once you file bankruptcy, all that aggravation will stop.
Finally, it always pays to remember that even though bankruptcy will remain on your credit record for a while, it certainly won’t “ruin your credit” forever. If you’re already not able to pay all your bills and have damaged credit, bankruptcy can help you regain your financial footing and start to rebuild your credit over time. If you’re ready to get a fresh financial start, it may be time to learn more.