The idea of bankruptcy being something positive is foreign to most Americans. For decades bankruptcy was viewed as a financial defeat, and the changing bankruptcy laws that were created in response to high filing numbers further cemented the idea that bankruptcy was bad. While bankruptcy is never the ideal solution for a given situation, it can actually help solve some of your financial troubles. Knowing these four ways bankruptcies can save your financial future can help you if you are unsure whether or not filing for bankruptcy is the right choice.
Improves Your Credit Score
Bankruptcy is viewed as the ultimate blow to your credit score. It is true that immediately after filing for bankruptcy your credit will take a blow, but over time your credit score can improve pretty quickly. Bankruptcy removes serious delinquencies and judgements from your credit report almost immediately and makes it easier to challenge negative records that remain. After filing for bankruptcy, it is common to see major improvement in three years.
Gives You a Chance to Rebuild
Once your credit score has plummeted into the “terrible” range, rebuilding it is tedious if not outright impossible. Negotiating existing debts to have them removed from your credit score, finding the money to pay delinquent accounts, and finding anyone willing to work with you again is difficult. After you file for bankruptcy and it is discharged, you have a chance to rebuild your credit. You will have access to credit in the form of store credit cards, secured credit cards, and even secured loans.
Wage garnishment occurs when creditors take you to court and obtain a judgment allowing them to collect the money you owe them directly from your paycheck. Approximately one out of every 10 workers in the United States is having wages garnished. These garnishments can immediately take up to 25% of your income, which is devastating for anyone living paycheck to paycheck. Filing for bankruptcy immediately stops all debt collection activities, including garnishments.
Protects Your Vehicle
For millions of working class people, their vehicle is the most expensive piece of property they own and the most important. Without a vehicle it is difficult, if not impossible, to get to work or school, especially if you live an area with limited public transportation. Keeping a vehicle is of utmost importance to many Americans, so the threat of a repossession is serious. If you are behind in your car payments and worried that the lender will repossess the car, filing for bankruptcy could give you the chance you need to get your payments back on track.
Consult an Attorney
If you are wondering how bankruptcy could help you, consulting an experienced bankruptcy attorney is recommended. An attorney who reviews your financial situation is in the best position to advise you regarding what chapter to file or if you should file for bankruptcy at all. The team at Adam Law Group is here to answer the questions you have and provide you guidance through every step of the bankruptcy process. Call us today to schedule a consultation at our Jacksonville, Florida location.