Filing for bankruptcy can offer you a fresh financial start, as it can end wage garnishments, creditor phone calls and other negative events. It may also allow you to keep assets such as funds in a retirement account or a Tennessee home, making it easier to rebuild quickly after obtaining a discharge.
You can rebuild your emergency fund
After your bankruptcy proceedings are complete, discharging credit card balances means you can put hundreds of dollars per month into your bank account instead of into the pockets of your lenders. Discharging a hospital bill may mean you don’t have to worry about getting a second mortgage on your home or taking out a personal loan. Ultimately, money that would be earmarked for bills can now be used to minimize the risk that you’ll have to file for bankruptcy in the future.
Rebuilding your credit
It generally takes about a year to rebuild your credit to the point where you’ll qualify for a car or home loan with reasonable terms. There is a good chance that you’ll qualify for unsecured credit cards within weeks or months of obtaining a discharge. However, applying for a secured line of credit with a small available balance may be best. This will allow you to make token payments each month promptly, which will help to improve your score and overall creditworthiness.
Creditors will leave you alone
Perhaps the best reason to file for bankruptcy is that you won’t have to dread answering your phone or getting the mail. This is because you won’t have to worry about your home or car being repossessed or the threat of a lawsuit hanging over your head.
After a bankruptcy, you should monitor your credit reports carefully. This will help to ensure that accounts are accurately reported as closed and that you don’t owe creditors any money. A copy of your credit report or bankruptcy paperwork may also be used to push back against creditors who may try to demand payment after a discharge.