When most people encounter financial difficulties, they view bankruptcy as an opportunity to build a new credit history. As a result of the coronavirus pandemic and its ensuing chaos, an unprecedented number of people are finding themselves facing financial difficulties and considering filing for bankruptcy. The following reviews some critical things that you should understand before you pursue bankruptcy as a method of taking control of your debt.
Bankruptcy is Not Embarrassing
The truth is that many hard-working and reliable people end up applying for bankruptcy. Many of these individuals are attempting to keep businesses going, while others simply have debts that become too much to handle. For other people, they are suddenly left facing unexpected debts due to medical bills or losing a job. Bankruptcy does not mean you are irresponsible and it is not something about which to feel embarrassed.
Filing for Bankruptcy Means Freedom From Debt Collectors
After filing for bankruptcy, creditors are no longer able to collect on any debts that you owe. Additionally, these creditors are no longer able to contact you or harass you about the repayment of any outstanding amounts. This means that bankruptcy protects you from the annoying and unpleasant interaction with creditors. Violations of these automatic stays can cause creditors to be penalized.
Bankruptcy Offers a New Beginning
Bankruptcy removes a person’s debt without taxation. This means that following bankruptcy, a person will owe neither the original debt nor any associated taxes for the rest of their lives. When a person files for bankruptcy, they often must take a credit counseling course which helps them determine how to handle their budget. The new beginning offered by bankruptcy is often an exciting opportunity for people who have had to juggle budgets, navigate creditor harassment, and survive hardships.
You Will Have a Chance Rebuild Your Credit
Most credit scores go down after a person files for bankruptcy, but it is also almost always easier to rebuild a person’s credit score after this process. Additionally, even though a bankruptcy filing appears on a person’s credit report for 10 years, within a year of filing a person begins to see an increase to their credit score. Rather than continue with a poor credit score, bankruptcy provides a chance to rebuild your credit score.
Your Home Might be Protected
Many people worry that assets they own, like their home, could be lost if they have to declare bankruptcy. In reality, this is not always the case. Instead, a person’s home is protected provided that it is below the exemption amount. Rather than worry about losing prized assets in the bankruptcy process, one of the best steps that a person can take is to speak with an experienced lawyer.
Speak With a Knowledgeable Bankruptcy Attorney
If you think that you might file for bankruptcy, it is a good idea to speak with a knowledgeable lawyer first. Contact the Adam Law Group today to schedule a free case evaluation.