What Are The Benefits of Declaring Bankruptcy?

Declaring bankruptcy is rarely an easy path to take — even if there isn’t a chance you’ll actually be able to pay back your debts.

Declaring bankruptcy means your credit (and credit score) take a hit, and your ability to secure credit becomes much more difficult, if not impossible. Not to mention the public perception of actually having to file for bankruptcy. It’s not an easy thing to do.

But for people who are struggling with a massive amount of debt, the advantages of declaring bankruptcy often far outweigh the disadvantages. Discharging debt through bankruptcy often eliminate stress by putting an end to relentless collection calls and the anxiety that comes from mounting bills with no solution in sight.

Declaring bankruptcy moves you past that and on the path to rebuilding your financial future the right way.

Top 10 Benefits of Declaring Bankruptcy

1) A sense of relief

The first thing that many people experience after declaring bankruptcy is a sense of relief. If you have struggled with debt for years and have recently become overwhelmed by threats from creditors, bankruptcy offers a solution to help remove those stressors and put you back on the path to financial well-being.

2) Collection agencies calls will finally stop calling you

One of the most unpleasant aspects of owing money is the constant phone calls from relentless bill collectors. Sometimes it seems they will never end – especially if you owe money to multiple creditors. Once you file for bankruptcy, creditors and collection agencies are no longer allowed to contact you regarding the money you owe.

3) Your credit score may start to rise quickly

“Within a year, you’re way better off. It’s a pretty rapid rate of recovery.” 

Jaromir Nosal, Assistant Professor of Economics, Boston College

Some people are hesitant to file bankruptcy because they are worried that their credit score will take a nose dive. But if you have already skipped payments and are facing collection efforts, your credit score is probably already in terrible shape. While your score may experience a slight dip, you may actually be better off in the long-term by filing bankruptcy and focusing your efforts on reestablishing your credit.

4) You might be able to keep your property

When you file for bankruptcy, you may be eligible for certain exemptions related to your home and other tangible assets. These exemptions allow you to go through the bankruptcy process without losing any of your property. Attempts to repossess your car will also cease. Your eligibility to keep your property will hinge on the type of bankruptcy you file, so be sure to seek the services of an experienced Tampa bankruptcy attorney to ensure that you declare the right type of bankruptcy.

5) You will receive valuable educational guidance

One of the requirements of a bankruptcy filing is to complete credit counseling. This process is designed to help you better manage your expenses and avoid frivolous spending. You will learn how to stay on top of your financial obligations, your assets, and your income to help ensure that you do not make the same financial mistakes that caused you to go deep into debt. Ideally, credit counseling will help you better manage your household budget.

6) You learn to live within your budget

As you go through the bankruptcy process, you will have to learn to live without credit cards. Many people learn how to spend more wisely and develop better savings habits. By continuing to follow these practices, you can avoid financial catastrophes in the future.

7) Creditors will stop garnishing your wages

Depending on your individual situation, one or more of your creditors might threaten to garnish your wages. They may also threaten to seize your assets. If you are facing these threats, or if your wages are currently being garnished, declaring bankruptcy will trigger an “automatic stay.” The automatic stay mandates that creditors put an end to your wage garnishments and eviction threats.

8) You can focus your energies on increasing your earnings

When you declare bankruptcy, you will no longer have to devote countless hours to responding to collection calls, letters, and threats from creditors. If you are employed, you will be able to approach your work with a clearer mind and you may find that your work performance improves. You will also have more time to devote to career development activities that will help you boost your earnings and secure your future financial position.

9) You will not be tempted to spend your retirement savings

One of the pitfalls people face when they are in deep debt is the prospect of dipping into their retirement savings or social security to try to repay creditors. This is usually not wise and can create a recipe for disaster for your future. If you successfully file for bankruptcy, your debts will be wiped away and any savings you would have applied to repaying your creditors would be lost. When you file for bankruptcy, you will not be tempted to make this financial mistake.

10) You will realize that there is life after bankruptcy

When you are deep in debt, the future can seem very bleak. But a successful bankruptcy filing will put you on the path to a brighter future. With most or all of your debts wiped away, you can regain your focus on your family, employment, and spiritual pursuits that were likely neglected when you were struggling with your debts. In short, you will discover that there is life after bankruptcy.

What to do if you are considering declaring bankruptcy?

If you are facing insurmountable debts and have thought about declaring bankruptcy, the best step you can take is to seek the guidance of an experienced Tampa bankruptcy attorney. Make sure that you do not procrastinate, as you could be draining your retirement account or other protected assets to take care of debts that would be eliminated through a bankruptcy filing.

We invite you to contact us at Florida Law Advisers, P.A. to schedule a consultation with one of our skilled bankruptcy lawyers. During your consultation, we will review your current financial situation and review the specific ways that declaring bankruptcy will benefit you and your family. We look forward to serving as your trusted bankruptcy attorney.