What are the Biggest Benefits of Filing Bankruptcy?

Each year, hundreds of thousands of people file bankruptcy throughout the United States. Still, filing bankruptcy still carries an unfair social stigma. Many people still see it as a sign of financial ruin or personal failure. Truthfully, it is neither of these things. Bankruptcy is a very powerful tool for individuals who are carrying too much debt they cannot repay. The process gives these individuals a fresh start and helps them get back on their feet. This is just one of the benefits of bankruptcy. Below, our Orlando bankruptcy lawyer explains what these are.

Eliminate Debt 

The main purpose of bankruptcy is to eliminate debt. Through a Chapter 7 bankruptcy, individuals can discharge, or eliminate, their personal loans, credit card debt, and medical bills that have been overwhelming them for years. Within just a few months, borrowers can see this debt disappear. Chapter 13 does not eliminate as much debt as Chapter 7 but it does reorganize it into a payment plan. These payment plans can eliminate interest charges and even reduce the total amount of debt owed.

By improving a person’s financial position, eliminating debt provides immense psychological relief. Avoiding harassing phone calls, juggling creditors, and losing sleep over bills that keep piling up is extremely stressful. All of this immediately goes away after filing bankruptcy.

Immediate Protection 

As soon as you file bankruptcy, the court will issue an automatic stay. The automatic stay prohibits lenders, creditors, and others from taking legal action to collect on debt. They also cannot contact you while the bankruptcy case is ongoing. This can immediately stop evictions and foreclosures, vehicle repossessions, utility shutoffs, and more.

Protects Important Property

It is a common misconception that borrowers lose everything in bankruptcy. Florida law provides some of the most generous exemptions in bankruptcy, allowing you to keep your home, vehicle, personal funds, and more. Additionally, retirement savings such as IRAs and 401(K) plans have complete protection in bankruptcy.

Improved Financial Habits 

Bankruptcy allows borrowers to reevaluate their financial solution and improve their financial habits. Credit counseling is a required part of bankruptcy and teaches borrowers how to track their expenses, budget, and prevent debt. Additionally, there are credit restrictions placed on borrowers and while these may seem like a hindrance, they are actually very helpful. These restrictions teach borrowers how to live within their means without credit.

Improved Credit 

It is true that filing bankruptcy can cause your credit score to drop. However, the drop in score can be relatively small. In addition, bankruptcy will remove old debt from your credit report, which can actually help improve your score.

Call Our Bankruptcy Lawyer in Orlando for Legal Help Today

Bankruptcy has many benefits but it is important to work with an Orlando bankruptcy lawyer who can provide legal advice throughout the process. At Anderson & Ferrin, P.A., our experienced attorney is dedicated to helping borrowers get the relief they need and we can put our expertise to work for you, too. Call us now at 407-412-7041 or contact us online to request a consultation and to get the legal help you need.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics