Bankruptcy, for many, signals an absolute low point that they would prefer to avoid at any cost. Not only does it indicate financial trouble, with bankruptcy typically indicating a person has more debt than they can reasonably pay off, but many see it as a sign of personal failure. But for some people, it may offer a chance to restart their financial lives. Here are five ways declaring bankruptcy might be able to help you:
- Protection from eviction or foreclosure
- One of the major threats that people face when they accumulate large amounts of debt is the possibility of losing their homes. Renters may risk being evicted due to nonpayment of rent, while homeowners may need to default on their mortgage, resulting in them losing their homes. While under the protection of the bankruptcy court, however, you cannot be evicted or foreclosed upon without the court’s approval. This means that even at your toughest moments, you do not need to worry about being forced into the street.
- Keeping your family vehicle
- If you are facing the prospect of bankruptcy and own a car or other vehicle, there is a good chance you have a lease on that vehicle that you have fallen behind on. Alternatively, maybe you own your vehicle, but you have a lien against it from one of your creditors. Or maybe you used the vehicle as collateral to secure a debt, and now the debt collector is looking to take it away. If you go into bankruptcy, you can keep others’ hands off of your primary mode of transportation, ensuring you will be able to go to work, pick up groceries, and do other things necessary for day-to-day living.
- Keeping away debt collectors
- If you are even considering the prospect of bankruptcy, you are probably well-acquainted with debt collectors and their particular form of harassment. Not only do they want you to pay the debt you owe them, but they will refuse to give you peace of mind until you have paid up. When you go into bankruptcy, your property becomes protected by the bankruptcy court, meaning debt collectors can only collect if the court allows it. Aside from taking some of the financial pressure off of you, it can help you regain some peace of mind as you go through the bankruptcy process.
- Your debt is discharged
- While there are multiple types of bankruptcy, they all share one thing in common: when you are done with the process, your debt will be discharged. This means that, with a handful of exceptions, you will no longer be responsible for paying back that money. Creditors cannot force you to pay them back for discharged debt, and you can ask the bankruptcy court for protection if they try to make you. This will help you restart your financial life free from most, if not all, of your previous debt obligations.
- Your credit might improve
- One advantage to having all of your debt discharged is that it can be pretty good for your credit score, even with the effect of the bankruptcy itself. As a result, many people who declare bankruptcy may find themselves suddenly able to qualify for credit cards and loans they previously were unable to get. However, this can be a double-edged sword, as it can be easy to start accumulating new debt soon after all their old debt was discharged. Bankruptcy can give you a new start, but you need to be careful not to fall back into old bad habits.
Bankruptcy is a complicated and stressful process, and one you shouldn’t attempt to undertake on your own. If you are in severe financial distress and considering bankruptcy, call the attorneys at McGuire, Pelaez & Bennett at 631-348-1702, or visit our contact page. Our offices are conveniently located in Central Islip, right here on Long Island. Our bankruptcy attorneys will work with you to ensure the best possible outcome for you and your family, and make sure that you gain the maximum possible benefit from bankruptcy protection.