Many people worry about filing for bankruptcy because of the social stigma it carries. It’s important to remember that bankruptcy gives people who are unable to repay their debts a way to resolve their financial problems. If you can’t pay all of your bills, filing for protection under the U.S. Bankruptcy Code might allow you to rebuild your life and enjoy a fresh start. At the Law Offices of Craig L. Cook, we understand that filing for bankruptcy is frightening for many people. However, there are several advantages of filing for bankruptcy that you should consider to determine whether it might be a good choice for you.
What Are the Advantages of Filing for Bankruptcy?
The purpose of bankruptcy is to provide financial relief for people who are unable to repay their debts. Declaring bankruptcy offers several advantages that should be considered when you’re trying to decide whether it’s the right option for you. An experienced bankruptcy lawyer can review your circumstances and help you understand the advantages of filing for bankruptcy as well as the other options that might be available to you for handling your debt. The following are some of the benefits that you should consider when making your decision:
If you are fielding a lot of collections calls, have pending creditor claims filed against you in court, are facing foreclosure or repossession, or are having your wages garnished to repay a creditor’s judgment, you can benefit from the automatic stay. This is an injunction that is automatically issued by the court when your petition for bankruptcy is filed. The automatic stay halts all further collection activities, including phone calls, letters, lawsuits, garnishments, repossessions, and foreclosures until your bankruptcy case is completed.
Discharge of Certain Debts
When you file for bankruptcy, some of your debts may be discharged. This removes your obligation to repay discharged debts. If you have a lot of credit card debts and medical bills, they may be discharged.
Improvement in Your Credit Score
When you file for bankruptcy, your credit score will take an initial hit. However, most people considering filing for bankruptcy already have poor credit. When you file for bankruptcy, your debt-to-income ratio will immediately improve. This is one of the factors that is used in calculating your credit score. After your debts are discharged, you may receive offers for credit that you can use to rebuild your credit.
Receiving a Fresh Start
Filing for bankruptcy will give you the opportunity to enjoy a fresh start without being weighed down by your discharged debts. It provides an immediate sense of freedom. You can also use the opportunity to learn to live within your means so that you do not encounter financial problems in the future.
Ability to Exempt Certain Assets
While people who file for Chapter 7 bankruptcy may have some of their assets seized to repay their creditors, many people are able to take advantage of the bankruptcy exemptions to exclude a large portion of their assets from their bankruptcy estates. This means that you may be able to hold on to more assets than you realize.
While Chapter 7 bankruptcy will only temporarily halt foreclosure proceedings, filing a Chapter 13 bankruptcy case might allow you to save your home from foreclosure. Unlike a Chapter 7 bankruptcy, a Chapter 13 case includes a repayment plan that lasts three to five years. You can use the repayment period to catch up on your mortgage payments and then keep them current to avoid foreclosure.
Talk to a Bankruptcy Attorney at the Law Offices of Craig L. Cook
Filing for bankruptcy protection is complex, making it important for you to choose the right attorney. At the Law Offices of Craig L. Cook, we can help you decide whether bankruptcy is a good choice for you and which type might be the better option. To learn more, contact us by calling 479-783-8000 or sending a message online.