The Benefits of Filing Bankruptcy


The notion that there are benefits to filing bankruptcy may seem more than a bit obtuse to some. After all, what is so beneficial to having to legally declare your debts far exceed your income and your ability to pay back your debts is nearly impossible? The answer is found in the protections you would gain from filing for bankruptcy. This is the main aspect of filing for bankruptcy that most people need to be intrinsically aware of. When you file for bankruptcy, you can seek protection from the courts from the encroaching legal ramifications you may face from being unable to meet your debt obligations.

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This is not to infer that it would be a wise thing to immediately file for bankruptcy when your debts have piled up. There are definitely negative consequences to filing for bankruptcy which is why you should never file for bankruptcy unless you have no possible way to pay off what you owe based on your current cash flow situation.

That said, those unable to make their obligations are well advised to speak with a bankruptcy attorney and explore filing options. The benefits that can be derived include:

Your immediate protection reveals itself as all debt collection stops. You will not have to deal with harassing phone calls, potential lawsuits, or garnishments of your wages. You do not have to worry about immediate foreclosures or repossessions since the courts will step in and try to remedy the situation to some degree.

In terms of the actual debts you owe, the court can effectively restructure the debt. That means a new and affordable payment plan will be instituted that exists within the parameters of your ability to pay. In some instances, a portion of the debt will be outright eliminated. In other instances, an entire debt might be wiped out. Such an action is known as being "discharged" from debt. The purpose of such restructuring is to create a viable payment option that you can logically adhere to and stay on top of. You would likely not be able to do this without a bankruptcy judge stepping in and making an assessment of your financial situation.

Do not automatically assume though that the judge of the bankruptcy court will completely see things your way. Rather, the judge will make fair and equitable assessments in accordance with the law and an eye on fairness to all parties.

As any qualified bankruptcy attorney will tell you, the prime benefit you would acquire from such a filing is the potential to completely start your financial life anew. You can hopefully avoid making the same mistakes of the past and help stay on top of your finances in the most effective manner.

However, if you truly wish to benefit from filing bankruptcy, you will need to alter your approach to your finances so that you do not fall into the same traps that led you into financial troubles in the first place.

Those that do allow their bankruptcy filing to set the stage for starting anew and avoiding the errors of the past will discover the true benefits the filing brings forth.


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