Last Updated on January 11, 2023 by James Gentile
Bankruptcy can help restore your financial stability and give you the “breathing room” you need to achieve your original financial goals. In fact, many famous people have survived bankruptcy and gone on to accumulate enormous wealth. Founder of Ford Automotive Company Henry Ford filed for bankruptcy over 100 years ago. By 1947, he was worth nearly $2 billion. There are benefits of bankruptcy, and it can impact your life in some positive ways.
Five Benefits of Bankruptcy
1. Chapter 7 Bankruptcy Can Wipe Your Debt Slate Clean
People who owe an unsecured debt (credit cards, personal loans, payday loans) often choose to file for Chapter 7 bankruptcy as a way of discharging debts and starting over again free of late payment fees and harassing creditors. Eligibility for filing this type of bankruptcy depends on whether you have the means to pay back debts. If you are determined to have insufficient income to settle all debts feasibly, you will probably be eligible for Chapter 7 bankruptcy.
2. Chapter 13 Offers Repayment Plans To Avoid Credit Score Fallout
Filing Chapter 13 with a bankruptcy attorney’s assistance can help you regain control of your finances by allowing you to make payments on debts while protecting you from aggressive debt collectors. Chapter 13 allows the legal discharge of any unpaid balances remaining upon completion of the repayment plan. Considered a legally enforceable debt management plan, Chapter 13 bankruptcy is another one of the many benefits of filing for bankruptcy.
3. Bankruptcy May Allow You to Discharge Student Loan Debts
With nearly one and a half-trillion dollars owed to the government by college students, there is no greater crisis jeopardizing the U.S. economy and the quality of life enjoyed by its citizens than the student loan debt crisis. What’s even worse is that this trillion+ debt does not include the $20 billion currently owed by college students to private lenders. Fortunately, more and more bankruptcy attorneys are successfully arguing for student loan debt discharge for those who cannot repay large student loans due to long-term, external circumstances.
4. Filing Bankruptcy is a Private Matter
Although bankruptcy filings are public records, someone would have to explicitly perform a search through the Court to find out if you have filed bankruptcy. In fact, the only time anyone would need to know about your bankruptcy is if, in the future, you apply for a credit card or loan or are asked to provide information about your credit history. If you need to file bankruptcy, no one except you and your attorney should have immediate knowledge about the bankruptcy.
5. Filing Bankruptcy Stops Utility Shut-Offs, Auto Repossessions, and Foreclosures
When your attorney files a bankruptcy claim on your behalf, this puts an end to stress caused by debt collectors, looming foreclosures, or loss of transportation. This “cease and desist” law allows all your present financial problems to be evaluated correctly during the bankruptcy process.
Be aware that while filing bankruptcy can discharge most debts, it will not eliminate non-dischargeable debts such as child support payments, alimony, criminal fines, and some tax debts.