Many creditors want debtors to believe that filing bankruptcy will destroy their lives. If they can keep the fear in the debtor, then individuals will shy away from bankruptcy. What creditors don't want you to know is that they will no longer be able to contact you or collect on the debt you owe. All of their threats are unenforceable if a person decides to file bankruptcy. In the case of a person filing Chapter 7 bankruptcy the creditor will receive nothing after the discharge. When it comes to a debtor filing Chapter 13 bankruptcy the creditor will receive a portion of what they're owed but they still will not be able to aggressively pursue the debtor with threats of lawsuits. Creditors don't want debtors to know that there are many benefits to filing bankruptcy.
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The most obvious benefit is that creditors will stop harassing you. Once a bankruptcy is filed, the automatic stay goes into place and stops creditors from contacting the debtor to pursue collection on their debts. They can't send letters, e-mails and the biggest one is, no more degrading phone calls. After filing bankruptcy you can put away your answer machine and start living normal again.
Another favorite benefit is the bill payments completely stop on all unsecured debts. This will give the debtor a huge burden lifted off their back and allow them to keep all their pay while the bankruptcy is going on. The only payments the individual might see is on a car loan or a mortgage. Even though you file for bankruptcy if you want to keep a piece of property that is the security for the loan you will have to continue paying for it or the creditor can file a motion for relief of stay. A relief of stay is the creditor asking the bankruptcy court to allow them to repossess their property that's not being paid for.
Not having any expenses, aside from living expenses and paying your bankruptcy attorney, the debtor will have a chance at a fresh start to get back on their feet. Many times, overwhelming bills, that cause people to live paycheck to paycheck, can be psychologically exhausting. This in itself will give the individual a chance to feel what it's like to be debt-free again.
Being completely broke can destroy a person's self-esteem. The constant worry of being able to afford your rent or mortgage payment can wear on someone. This stress causes marriages to fall apart and families to fight. Eliminating the worry will allow the family to focus on what's important again.
Creditors try and tell individuals filing bankruptcy that their credit will be completely destroyed. The individuals already are in a terrible position financially with many unpaid and late paid bills. Many times credit ratings will return quickly because of debt ratios will drop. Many creditors court post-bankruptcy filers knowing that their debt-free and can't file again for eight years.
Filing bankruptcy can help individuals feel that the weight of the world is lifted off them after removing a huge amount of debt that was crushing their financial freedom. Bankruptcy has many benefits depending on the individual's personal situation. People in financial trouble should take the time and consult a bankruptcy attorney to see if bankruptcy will work for them.
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