The Advantages of Filing for Bankruptcy

Can You File for Bankruptcy and Keep Your House? | Credit Counselling  Society

Filing for bankruptcy has many long-term consequences. If you think about going this route, you may be relieved to know that not all results are negative. Here are three reasons why filing has some advantages and may improve your financial situation.

Creditors Are Not Allowed To Contact You

As soon as your¬†Rockville bankruptcy lawyer¬†files your petition with the court, creditors cannot come after you for your debt. This means no phone calls, no wage garnishments and you no longer need to worry about them repossessing your property. While the bankruptcy is in process, which can take several months, you have peace of mind knowing that your debt is on hold. You may choose to exempt some property from the filing, such as your home or car, because you want to keep them. If that is the case, it’s crucial to continue making your monthly payments on these loans, so they remain in good standing.

Your Debts Get Erased

A significant financial advantage to filing bankruptcy is that your eligible debts get discharged. Most qualifiable debts are things such as utility bills, credit cards and medical debt. When the court terminates the debt, you no longer owe that money to the creditor indefinitely. This includes the original balances and any past due fees or fines.

Your Credit Score Improves

Even though the bankruptcy stays on your credit report for 7-10 years, you can start rebuilding your credit right away. If you discharge all of your debt, your debt to income ratio improves, raising your overall score. Some banks are willing to work with you to give you small amounts of new credit, and on-time payment allows you to rebuild your score even more.

If you think bankruptcy may be your only option to relieve your debt, feel confident knowing there are positive financial outcomes.