What are the Benefits of filing bankruptcy?

Filing for bankruptcy used to carry a certain moral stigma. But as more and more individuals turn to bankruptcy as a way to offset mounting debt, this former stigma is diminishing. For many, filing bankruptcy is a viable debt solution that protects debtors and their property from the collection efforts of creditors. However, in exchange for the being given a "fresh start" those filing for bankruptcy protection must divulge personal details regarding their financial situation in their petition and in the meeting with creditors. Debtors must also comply with strict bankruptcy rules and procedures. If filing Chapter 13 (debt restructure) as opposed to Chapter 7 (asset liquidation), debtors must commit to a strict budget plan for three to five years. 

How Does Filing Bankruptcy Benefit a Consumer?

Filing bankruptcy has a number of advantages that include the following: 

• An immediate stop to harassing collection calls and other collection efforts such as foreclosure and repossession;
• A chance to restructure debt under Chapter 13;
• Possible improvement to a debtor’s credit score after credit reports on unsecured debt cease; and
• Erasure of most unsecured debt. 

One of the biggest advantages of filing bankruptcy is the psychological relief from constant bombardment by aggressive creditors or the impending fear of possible foreclosure and/or repossession. Filing bankruptcy re-establishes a sense of control for the debtor.

Filing bankruptcy is no longer seen as an avenue for deadbeats, especially in today's economic climate. Approximately 1.4 million people filed bankruptcy between early 2009 and mid-2010. If you face insurmountable debt and are being harassed, filing bankruptcy may be a common sense option for you. Talk with an attorney to discuss the benefits of filing bankruptcy.