Many people who are trying to get out of debt believe bankruptcy to be an unfortunate last resort. However, filing for Chapter 7 bankruptcy can actually be beneficial for many Louisiana residents who have accumulated significant amounts of consumer debt. Those who file can emerge with a clean slate and begin rebuilding their finances without the worry how to pay off overwhelming debt.
Chapter 7 is the most common type of bankruptcy. When filing this form of bankruptcy, all assets belonging to a person or company are liquidated. This can help to eventually raise credit scores. Though scores will not be completely restored until the bankruptcy drops off the credit report, research done by the Federal Reserve Bank of Philadelphia showed that the average credit scores of those who filed for Chapter 7 rose nearly 100 points within about six months.
Filing for bankruptcy has other benefits as well. Chapter 7 bankruptcy can completely erase several types of consumer debts, including credit card debt, medical debt and past-due rent and utility bills. Collection efforts are stopped when these bills are removed, meaning that collection agencies can no longer pressure the filer to pay.
Bankruptcy could be the best option for those struggling with consumer debt. In many cases, the sooner it is dealt with, the better. By consulting with a trained Louisiana bankruptcy attorney, clients can learn more about the specifics of Chapter 7 bankruptcy. An attorney can also help with the filing process if it is deemed the best solution for the individual or company.
Source: nerdwallet.com, "When Bankruptcy Is the Best Option", Liz Weston, Accessed on Feb. 27, 2017