People often have a misconception about bankruptcy, assuming it is somehow dishonest or dishonorable. While feelings of failure or struggle can often overwhelm people, it is crucial that you not allow those feelings to pollute a favorable and useful debt management tool. Bankruptcy is not about trying to defraud creditors or illegally avoid your financial responsibilities, it is a tool that helps make your whole, and there are at least four advantages of using it.
- Credit Score Improvement
Despite the common misconception, bankruptcy is a credit tool, and it is meant to rebuild a favorable credit rating. A bankruptcy will indeed stay on your credit report between three and ten years, depending on the type of filing, but that doesn’t mean you have a sentence of ten years of unworthy credit. You may not be able to secure a mortgage within that timeframe, but you will be able to secure other loans and even credit cards. Most filers see an improvement in their score because debts are discharged from their report due to the bankruptcy.
- Ceasing of Creditor Communications
A significant benefit of filing bankruptcy is the immediate ceasing of creditor communications. Bankruptcy is a legal filing that involves the court’s interjection on your behalf. The filing means that you are in negotiations about your debts and that during that time, no creditor can contact you. If you receive any messages after filing, make sure that you immediately forward those communications to your attorney for review.
- Asset Protections
While not every type of bankruptcy will protect all your assets, some will allow you to make specific property exemptions. You will need to consult with your lawyer to determine the type of filing necessary to protect the asset or assets you wish to protect. However, you need to know that protecting specific assets may restrict the scope of the bankruptcy, leaving you responsible for several types of debt.
- Dischargeable Debt
Dischargeable debts are debts that are typically canceled through bankruptcy. The canceling or discharging of a debt means that you will no longer be responsible for paying these debts. Most commonly, these bills will include credit cards, personal loans, utilities and medical bills.
If you are currently struggling with your debts and do not know how to make your payments without sacrificing essentials, then consider filing bankruptcy. Contact a bankruptcy lawyer in Tampa, FL, like from The Law Office of Michael A. Ziegler, P.A., to discuss specifics about your situation.