When you are struggling with increasing debt, you are probably also struggling to decide what step to take to get out of this situation. You know bankruptcy is an option, but there is so much stigma attached to it. You may be afraid it will ruin your credit permanently or cause you to lose important assets.
However, bankruptcy is likely the best choice to make. Other debt relief options may be shady, unrealistic or unhelpful. Filing for bankruptcy, on the other hand, comes with immediate and long-term benefits, such as these three.
1. Stop creditor harassment
Are creditors contacting you constantly and treating you with disrespect? Even if their actions have not reached the point of harassment, the continual phone calls can quickly become stressful and overbearing. You can put an end to the communication by filing for bankruptcy. If you have an attorney, you can also request that any contact goes through your legal representative. Creditors who violate these terms are subject to legal consequences.
2. Receive an automatic stay
When you fall behind in payments, creditors may begin to try to take away your possessions or garnish your wages to collect some of the money you owe. Bankruptcy ceases this activity through an automatic stay. Creditors will have to pay back any recovery of debt that occurs after you file. If you already lost your automobile, an automatic stay can return the vehicle to you. The same applies to utility services. After your initial action, what assets you will be able to keep depends on the type of bankruptcy you file (Chapter 7 or Chapter 13), state exemptions and other factors unique to your case.
3. Improve your credit score
It may seem counterintuitive, but bankruptcy actually improves your credit score. Staying in debt is what harms it. After the bankruptcy process is over, you can rebuild your credit quicker than you think and be eligible for loans and reasonable interest rates.