5 Top Reasons To Consider Filing for Bankruptcy
If you are struggling with overwhelming debt, one of the options available to you is filing for bankruptcy. However, we understand that the decision to file for bankruptcy may not be easy. Bankruptcy is often associated with negative connotations. For example, some people view bankruptcy filers as financially irresponsible. It is crucial to remember that people’s negative perceptions about bankruptcy filers don’t necessarily reflect your financial situation. The truth is that filing for bankruptcy is often a responsible and strategic choice that can help an individual handle overwhelming debt.
There are several benefits of filing for bankruptcy. If you are dealing with overwhelming debt, the following are some of the top reasons to consider bankruptcy;
Automatic Stay
One of the main benefits of filing for bankruptcy is the activation of the automatic stay. This legal provision temporarily halts most collection actions and legal proceedings initiated by creditors. The automatic stay is meant to stop, among other things, lawsuits, foreclosures, wage garnishments, eviction proceedings, phone calls, and letters. The automatic stay is imputed regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy.
Debt Discharge
One of the most significant reasons to consider filing for bankruptcy is the ability to discharge your debts. If you file a Chapter 7 bankruptcy, you will be able to eliminate most of your unsecured debts. These are debts that aren’t backed by collateral. They include medical bills, credit card debt, and personal loans. If you file a Chapter 13 bankruptcy, your debts will be reorganized, and you will be required to pay off the debts over a period of three to five years. After that time, any remaining unsecured debt may be discharged.
Debt Reorganization
The fact that filing a Chapter 13 bankruptcy can allow you to pay off your debt over three to five years is another major reason to consider filing for bankruptcy. If you are committed to repaying your debts but don’t have the financial ability to do so in one go, filing a Chapter 13 bankruptcy can allow you to pay off your debt slowly. Each month, you will make payments to the bankruptcy court, then the money will be distributed to your creditors. A repayment plan can include car loans, medical bills, credit card debt, mortgages, student loans, and even certain tax debts.
Interest Rates Reduction
If you file a Chapter 13 bankruptcy, interest rate reduction may be included in your repayment plan. If you comply with your repayment plan, creditors may be willing to reduce interest rates to facilitate debt repayment. Reduced interest rates are an advantage that can be gained, particularly in relation to secured debts like car loans and mortgages. However, it is vital to note that creditors are not required to reduce interest rates. Some creditors may be unwilling to lower interest rates.
Fresh Financial Start
Filing for bankruptcy can offer you a fresh financial start. You can free up income for other expenses by eliminating or reducing debts. Restructuring debts can allow you to catch up on missed payments and regain financial stability. Additionally, bankruptcy can help get rid of the anxiety and stress associated with overwhelming debt, allowing you to focus on improving your financial situation.
Contact a Lehighton & Carbon County Bankruptcy Attorney Today
If you have questions about bankruptcy or need help determining if bankruptcy is the best option for you, please contact our Lehighton & Carbon County bankruptcy attorney at Adam R. Weaver, Esq.
