Despite being a legal and beneficial process, bankruptcy continues to carry significant social stigma, especially among those who might benefit from it. Many people seem afraid to file for bankruptcy, as they think it will have nothing but negative consequences for them.
However, bankruptcy is a process intended to help people struggling with debt. Filing for personal bankruptcy can be a source of relief and a way to secure a fresh start after a difficult time in your life. There are several ways in which bankruptcy is beneficial for both your financial circumstances and your life in general.
Bankruptcy reduces the number of marks on your credit report and your debt
One of the big reasons that people are afraid of bankruptcy is that it comes with a big blemish on their credit report. Chapter 7 proceedings will stay on a report for a full decade, while Chapter 13 proceedings will impact someone’s credit score for seven years.
However, that is only one mark, and bankruptcy allows you to remove any other negative marks from debts that you discharge. Instead of multiple high-balance accounts with past-due statuses and judgments or collection accounts on your credit report, you only have one blemish whose impact diminishes over time.
As if that weren’t enough of a benefit, bankruptcy also eventually results in a discharge of your unsecured debt, which means that you don’t have to pay back certain accounts, like credit cards and medical debt. That can free up hundreds of dollars in your monthly budget and put you in a much more financially stable situation. When you don’t have to make those massive credit card payments, you may actually be able to balance your budget!
Filing bankruptcy can ease your stress and give you hope
When you have creditors calling you every day and breathing down your neck, it can be hard to sleep or even enjoy a meal with your loved ones.
Filing for bankruptcy gives you the benefit of an automatic stay, meaning those collection efforts stop immediately. Additionally, once the courts discharge your debt, you won’t have to worry about those creditors ever calling you again. You can use your discharge as a way to take control of your financial life.